A trip to India can be done very cheaply. India is one of the world's poorest countries and daily living is inexpensive. Good news for travelers on a tight budget.
It's common knowledge - India is a poverty stricken country and you see it everywhere, every day. So one thing's for sure - a trip to India will not cost much. If you're really squeezed for money, you can get by on 330INR (3,50£) per person, per day. Obviously, that won't get you a room in a former Maharajah's palace! At such a low budget, you'll be stuck with the basics. But if you're not fussy about comfort (or hygiene) then it can be done. In terms of hotels, food and transport, you'll live the same life as the locals. At the same time it's one of the best ways to get to know them, bearing in mind that most Indians survive on less than 65INR (6,50£) per day, for an entire family.
By spending a bit more, you can up your comfort level. Regarding transport, it's also a matter of comfort. Buses and trains are really cheap. You can cross the country for peanuts, although you'll need to have time on your hands. Trains can be several hours late...indeed, this seems to be the general rule. If you can, try flying. Low-cost airlines offer competitive rates in India. As well as being cheap, you'll save a lot of time.
Train, bus and rickshaw prices range from centimes to a few Pounds. Whatever you do, negotiate the price and stick to it. If you don't, you'll end up paying several times more than the going rate. For longer distances, check out the cost of flying. You'll pick up tickets from about 3320INR (30£) and you'll save time.
As for accommodation, basic hotels with very basic facilities cost from 65INR (6,50£). A double room with standard facilities will cost around 330INR (3£) and, at the other end of a scale, a luxury room will cost upwards of 33200INR (328£). Prices are higher in big cities such as Delhi and Mumbai.
As for food, you can eat off the street or in canteens used by the locals for 65INR (6£). Chic restaurants charge 'European' prices.
As for visiting sites, you'll quickly find out that there's a price for locals and a price for tourists. It's ridiculously cheap for Indians - which is great, as it allows them to enjoy the beauty of their own cultural heritage. So don't be surprised if you're charged 1000INR (15€) to see the Taj Mahal (the most expensive site), whilst Indians only hand over a few pennies.