You could not have been any further off the mark. In case you forgot, this government was elected by the poor working class of India (which came as a surprise). People who have been most affected because of this tragedy. Besides, a natural disaster like this is a failure on the Government's part, how?
Second, the next round of general elections is more than four years away. Let me say that again, the next time this government comes up for re-election it'll be at least four years from now. Sure, they're thinking of re-election issues rather than deal with the task at hand. And the democrats are choosing their candidate for 2020, right!
India itself has released an immediate amount of $200 million for its people and is donating $30m to other affected countries. Surprisingly there's no mention of this in the article either.
With most of the foreign aid disguised as long-term loans, a "Thanks but no Thanks" may have been in their interest (considering the economy is showing robust growth of more than 8% a year) and with India's foreign exchange reserves at an all time high.
Another clue that suggests this might be the underlying reason is that the refusal does not include non-governmental and aid organisations who are there to help in other ways such as much needed manpower, supplies and medicines.
So, the reason is purely economic. India understands there are other countries that may need help more than they do. India can and will front up the cash that is needed to clean up this mess while helping its neighbours in any way it can.
I'm all in favour of keeping dangerous weapons out of the hands of fools. Let's start with keyboards.