Correct me if I am wrong, but I think for 7k OP should get the HD 7770 as I have heard that it offers much better performance than the R7 250.
HD7770 is definitely better then R7 250. Actually is'n now also available as R7 250X which is just re-branded HD7770. Better GPU wasn't suggested because the budget initially didn't included a PSU.
Sapphire AMD/ATI HD 7770 1 GB GDDR5 Graphics Card - Sapphire: Flipkart.com
^Is this the card?
I can get this too I just wanted to confirm on the CPU and one of my friend also has a similar rig with an old AMD Phenom tri-core@2.7GHz he also wants to get the same card would he need the same PSU?
What do you want to confirm? Have you or have you not already purchased that CPU?
It's always good to have a little headroom for future upgrades and also atleast a PSU of ~450 watt is recommended.
Check his CPU buddy, it alone needs ~250 W of power. Use this wattage calculator to get an estimate- eXtreme Power Supply Calculator