Yeah, it is kind of racist. Either reincarnation is real or it isn't. Their belief isn't that Hindi people are reincarnated; they believe it is what happens to humans when they die. The movie isn't proposing that reincarnation is real, because no other baby seems to recognize it, so it is more mocking their belief.
No it isn't. What next? The scene where they show the baby girl screaming like a lunatic is sexist because they are insinuating that females are over dramatic?
When will this over the top PC horseshyt stop for the love of Pete?!