Bombay was the perfect setting for Hindi cinema because no one in Bombay was invested in Hindi high culture, or shudh Hindi or indeed in Hindi at all. The Bombay film industry used its approximations of Hindustani because they worked at the box office. It used an idiom closer to Urdu than Hindi for several reasons: Urdu’s metaphorical extravagance suited the purposes of stylized melodrama, Urdu’s history as a language of administration and official discourse gave it a plausible and credible idiom in which to render public context: the court-room scene is a case in point.
The producers of Bombay’s Hindi cinema were free to use Hindustani in whichever way they wanted because the Hindi cinema needed neither subsidy nor government patronage and also because Bombay’s distance from Hindi’s heartland protected them from the zealots who took charge of Hindi with the founding of the republic, cultural commissars who would have had dialogue writers replace dil with hriday and khoon with rakt. A Hindi film industry located in the heartland would have produced either popular dialect films (like the Bhojpuri film industry today) or solemn new-wave type films with Sanskritized titles like Aadharshila and Aakrosh and Ardh Satya. These might have gone on to win critical acclaim but they would not have created a pan-Indian audience, nor spun pan-Indian dreams.
From Mukul Kesavan's article in The Telegraph. More here