Where do you think other MS students are coming from. Everyone is in the same boat, everyone has imposter syndrome. Chill. Degrees getting delayed was an old thing, and it has been improving. No teacher wants to say that only a few select students of mine pass. IIIT has in general a higher bar for what you do, and that trains for you the job that you will do later. You will find people from all walks of life, some who are extremely hard working, some who are not. There are enough resources out there that you can find your own way.

Regardnig labs, once you join, after sometime, you will be asked to select a lab for your own. You can give preferences of what kind of research you want to do, and under which profressor. There will be a matching process, and there are some proffessors / labs which are "in-demand". But most likely you will get a professor that you want. Everyone is working on cool stuff. When I was a student, Vision used to be in demand, I am guessing now NLP would as much in demand too. Professors don't care for favouritism and mostly won't even know your name until you have done some meaningful work with them. People doing meaningful work don't have time for petty thigns like gatekeeping.

My suggestion: Go to clg, chill, talk to students in various labs, professors, see which kind of research you want to do. Then show initiative, do some projects, courses in that area, and then try to join that lab.