I have no idea why the Indian government has rules against Intra-India, I believe thats due to the Hawala factor... IT
Two things to know about PayPal that most people don't know - 1. When you withdraw money from your PayPal account, they have several levels of security notifications designed to alert their loss prevention department and possibly block your account requesting further identifying information before the withdrawal is approved. To avoid that, try to limit your withdraw requests to below $1,000 or below 10 transactions. 2. If you are in the US, you can setup auto-sweep. This is a feature that is not advertised but if you call PayPal directly they will activate it for you without giving you any problems (they are required to by law). This feature will automatically deposit your daily total earnings on PayPal into your checking/savings bank account via automated ACH.
You can request for cheque after your account balance reaches to $150. Paypal will charge extra $5. If you have relatives or friend in Us, you can received payment by xoom through them.
You can actually get a payPal debit card and use it at ATMs or anywhere MasterCard is accepted. This is the fastest way to withdraw money from PayPal. Otherwise you can transfer to your bank to to someone else who can cut you a check.
If you are in a country where direct withdraw from paypal to your bank account is not possible you can exchange it for western union via Http://swapmybuck.com in less that three days, I hope that helps you.
I would advise you NOT to use Swapmybuck. I sent them $80 PayPal to change to LibertyReserve three weeks ago. Not only did they NOT respond to the several e-mails I have sent since, they also updated their website to say that they no longer accept PayPal. This would be fine if they honored the exchange that I placed before they updated their page. Or at least refund my money. At this point, I have given up on currency exchangers. Too many scam sites out there to bother anymore.