ISRO never called it a shuttle. It has always been refered to as technology demonstrator (RLV-TD). Current experiment is termed RLV-TD HEX (Hypersonic flight Experiment). The ultimate aim is to develop an RLV named Avatar, which was originally announced over 17 years ago.
This particluar test flight should not be compared to US space shuttle. Better comparison would be X-43A or X51-A Waverider. As these have defence applications, the projects had been running between NASA and DARPA. Similarly, India's Avatar programme has also been shuttling between ISRO and DRDO (Defence Research & Development Organization).
The main feature of Avatar concept is an air breathing Scramjet engine. So far there hasn't been any great success in developing Scramjet engine. The longest one fired for 15 seconds on second flight of X-51A, while its first flight didn't run scramjet. India is nowhere near developing Scramjet in immediate future. But the current flight will test some preliminary technologies related to that project, specifically hypersonic reentry. I don't think this particular vehicle has any propulsion. Even the next two experiments planned on the series (LEX and REX) are planned without any rocket propulsion, but will use turbofan engine for landing. Actual powered flight would be on the SPEX, which will use Scramjet (Source: http://isp.justthe80.com/launc...
Current test is a 100 crore INR (about 16 million USD) experiment. I am happy that ISRO is doing something to take this promising technology further. It may take another 20 years before actually seeing a scramjet engine in action, but that is ok. I would consider it as my tax money well spent.