I watched this movie when I was in junior high. Then, I did not really understand its themes as you have clearly stated but, what got from the movie then and remember is: Rancho was overlooked in school by students and even by his professor who dared him to graduate and he was going to give him his( Viru) pen which was given to him for his excellence.
To his amazement, Rancho did not just graduate. He graduated flamboyantly!! It is one of India best movies in my opinion.
Oh myyyyy!! The song part where he uses his personal cliche "all is well" in song form is where I love the most!!