Earlier quoted context omitted.
What's even more fascinating is that ISRO survived at all, through the cold war. The fact that India has a fledgling space program, despite its problems, strikes me as rather inspiring. The fact that it was done cheaply stems partly from the fact that there is a factor of ~5-10 between the purchasing-power and corresponding USD value (which is why engineers in India seem to be paid lower in dollar terms).
@enupten, Following books provide an excellent insight on ISRO's beginnings and growth. They are a superb read: "A Brief History of Rocketry in ISRO" by P V Manoranjan Rao, P Radhakrishnan "India's Rise as Space Power" by UR Rao "Wings of Fire" by Dr. A. P. J. Abdul Kalam, with Dr. Arun Tiwari
While searching for these, I found what appears to be a pretty comprehensive list of books on Indian space program here: http://forum.nasaspaceflight.com/index.php?topic=33814.0