Okay. Here is an update! After 16 days, numerous calls to the SDO, Area manager and several calls to the CMD office, I finally got my mtnl broadband installed today! I was really stoked when it was getting installed, as I was missing watching youtube vids to my heart's content and downloading movies and doing my work at the same time!
I was really really disappointed after it got installed and I checked the speed. Here's the screenshot.
http://img571.imageshack.us/img571/6192/fullscreencapture421201.png
I called the customer care, and they blatantly and shamelessly told me that mtnl only says that it's a 512kbps plan but the speed NEVER reaches that point. He told me that I am not getting anything less than what other users get on this plan usually and that I should dump all hopes of ever getting 512 kbps (or even close) on this plan and be content with what I am getting.
So I'd suggest to not go for mtnl unless you don't have any other choice. They are incompetent, inefficient and basically an openly fraud company.
PS : Mtnl is only staying in my home as a temporary solution till airtel gets it's act back together, because before this major f**k up, I never had any problems with airtel, and I was more than happy with the speed they were providing (I had the 649 plan and speed was always very close to 512kbps if not equal).