Logitech G27 is the best if you can afford it now. For your budget, you can get a starter wheel. Here's some:
1) ThrustMaster Ferrari Universal Challenge 5 in 1 Racing Wheel - Rs.2000 (letsbuy with coupon codes), 2500+ on other shopping carts
2) Nitho Drive Pro Wheel - Rs.1700
3) Genius Twin Wheel F1 - Rs.1700
4) Genius Speedwheel 5 Pro - Rs.2500 (with coupon codes)
5) Zebronics 500RW Gaming Wheel - Rs.1500
6) Saitek R100 Gaming Wheel - Rs.1600
7) Zebronics 1000GW Gaming Wheel - Rs.2300
8) Genius Vibration Feedback Wheel - Rs.2600
9) Saitek R440 Racing Wheel - Rs.2500
10) Intec (sorry, not intex) Racing Wheel - Rs.2300
11) Frontech Adventure Wheel - Rs.2400
12) Gladiator Racing Wheel - Rs.1700
13) Enter Racing Wheel - Rs.1600
All the above mentioned models are available in India at online shopping sites or local stores...
There was a fairly good wheel from logitech in sub 3k range. It was called "Logitech Formula Vibration Feedback Wheel" . Its not in production now, I think. Last time I saw one of these wheels was on a shopping cart for 2600rs. Its a good wheel for this price in my opinion if you can find one.
Also someone was selling a Genius and Frontech used wheels on forum for less 1k. You can try those too
If you have a smartphone with accelerometer, then you can make a 'home-made wireless steering wheel' at no extra cost with basic functions like steer left and right, accelerate and brake. Thats what I use now. Phone is N95...
Just like you, I also badly need a gaming wheel. But I am waiting and saving money to get myself atleast a Logitech Driving Force GT (6K).. Buying a cheap wheel is no better than having no wheels at all!!!!!!