Considering the only good series they've had in the past year is the world cup and perhaps the series right after it with South Africa and Bangladesh.
From Jan 2002,
Won at Natwest
Won against Zimbabwe at home
Drew England at home
Won against WI away
Won ICC knockout tournament, shared with SL
Lost against WI at home (3-4)
Lost against NZ away (2-5)
Runner up in WC finals
Shared TVS trophy with SA
India lost three series in the year- the WC, NZ and WI home won everything else.
The problem I see for India is that we didn't play Australia or Pakistan in a series. Or for that matter SA in this period.
However, I think this is a better record than all other teams bar Australia and SA for the same period.
Whatever, I don't think people really care about the rankings. It's not like tennis where seedings and the such come into play.
Cricket rankings are an afterthought.
BTW, how can the fact that 3 pts separate no. 3 to 8 be a defense for the rankings? That should be a negative factor! It means that a single win/upset can drastically change the ratings of the teams rendering any ordering meaningless. It's not robust to small changes, therefore useless.