Suppose I had a 150 TB / 74 CPU dual quad Intel on Rental.Connected by dual Ethernet of 1.0 Gigabits second. Would it help advance research in India ? Would new pharma drugs come out of it ?
This is exactly what Computational Research Labs (CRL India) already do! And it's all on top of GNU/Linux. BTW, it's nowhere near as cheap as you proposed, to keep the system running. The power-bill alone will run up nicely (remember you need good cooling too), and where h/w costs can go down, power costs are sure to go up.
For students, it would probably be easier/cheaper/more_instructive to set up clusters on networked labs in their colleges (at least that's what we did). It's pretty easy over a standard(NFS+NIS) installation. IMO, if your project actually needs a serious cluster, the educational institute should shell out good money for it. The idea definitely has merit ... hopefully it's time will come soon.
Regards, farazs