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Interesting stuff. We go to China every year or so, and it's always an adjustment spending time in a place like Beijing and Shanghai. I haven't been to India, but I've been told the density is even higher. I think one way that humans cope is that they carve out a place of refuge, even if it just a small studio apartment. Even in crowded cities, people can get a significant time with little contact.
I do have to wonder what the effect in over-crowded prisons is though. Imagine this existence: http://i.imgur.com/owvao.jpg
Have you seen Louis Theroux's documentary on the Florida super prisons? It's 24 people to a cell and there's a violent culture of punishment and retribution within the inmates. It was fascinating.
One criminal told Louis that he would have taken his shoes if he himself was an inmate and that he would have had to fight for them and to be allowed to stay in there. There's that phrase log cabining or wood cabining describing where you just remove yourself from society to do something creative, it's an urge we all have.