Compare Television: LCD TV, Flat Televisions, Plasma TV. Compare Price, Size & TV Features
also you can check above URL for little bit of pricing and models from LG and Samsung.
and as pegasus already said you certainly can get Full HD displays in less than 40K in 32 inch. .mkv is like our avi. Earlier it was not possible to play avi files in DVD players later it came up. .mkv is rip of blue ray prints generally
and DVD players are still on H.264, VC-1, MPEG2, DivX Ultra, AVCHD, WMV, XviD, in near future I hope they will be able to play mkv too
to play mkv your only option is to do that through computer
you get digital output in HDMI and DVI -- this is what pegasus also said in his previous post
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similarly if you check Compare india you will find models in sony and LG in your price range