There is an ethical question regarding the spending of even these, relatively small sums, by an impoverished nation. But there could be some payback in terms of technology advance and perhaps selling launches at a later date.
I never quite understand this argument, to be honest. After all, every single rupee was spent on Earth, with presumably, a large chunk going on wages for the employees, into the industries that supplied the kit and so on. Isn't that the role of government...to upskill it's people and develop industries that provide jobs?
I remember seeing this article a while back and I was struck by the eloquence of the reply.
http://www.lettersofnote.com/2012/08/why-explore-space.html
I agree with your rejection of the argument, but I would respectfully disagree with the basis of your rejection.
Yes, all the money was spent here on Earth, but there's also the issue of where the constructed infrastructure is put to use. Instead of building a spacecraft, the government could have chosen to use the money to build infrastructure here on Earth which would have had a direct economic benefit to India, like new roads or hospitals. The salaries would still have gone into pockets here on Earth, but in addition there would have been the economic benefit.
Accordingly, I think this is a weak counter-argument to use against the point raised by Bryanpoprobson.
Personally, I think a better counter-argument is to ask why such savings should be made from the space exploration budget when it represents such a small part of the government's budget. Far bigger savings could be made in all sorts of other areas of government expenditure, with defence being an obvious target.
People apparently massively over-estimate the size of NASA's budget as a proportion of US Government spending (by a factor of 10 or more). So when people talk about what appears to be the massive cost of space missions, I prefer to compare it to some other piece of government spending (or, perhaps, non-government spending): the MAVEN mission cost less than one B-2 bomber, and LeBron James could have paid for the Mangalyaan mission out of his Nike contract alone.
In any case, when it comes to India, general inefficiency and corruption is probably a far bigger waste of money than a space mission:
http://www.smh.com.au/world/yes-minister-our-empty-hospitals-in-new-delhi-are-world-class-20140717-zu8c4.html