The most overrated Indian city that I feel is Mumbai.
Nicknamed as the City of Dreams, Mumbai used to be the dream City for many people who came to the city in search of a job, starting a new business or achieving their dreams, but all that is in the past. Today, Mumbai is one of the most polluted cities in the world and the cost of living is sky high. It is probably the most expensive city to live in in India and, being in very close proximity to the sea, the humidity is always on the higher side and is prone to frequent floods.
I had a friend, an ex-colleague who started his career with me at TCS. After our training, he was posted to Mumbai and I came to Kolkata. He shared a 1-BHK flat with four other roommates — three slept on the bed and two slept on mattresses on the floor and their rent was 20,000 rupees a month! On top of that is the maddening crowds of the Mumbai local trains. It is a good city to visit if you are there for a week or so, stay at a fine hotel, visit the Marine Drive in the evenings, get your pictures clicked in front of the Gateway of India, visit the Elephanta Caves, but that's it. Do not extend your stay beyond that, because it isn't worth it.
While Kolkata is extremely underrated when it comes to listing the best cities to stay in, I would not consider Kolkata because of the summer heat and the humidity. Instead, Chandigarh is the city that I think is the most underrated. I was there in Chandigarh for a few days last year and I fell in love with the city. The city is well planned, which is probably why everything is in place over there. The roads are neat and clean, there is proper pavement everywhere and a dedicated bicycle track too! It is so convenient for vehicles, cycles as well as pedestrians.
The food is super cheap and delicious! The cost of living is quite decent and definitely not as overpriced as the metropolitan cities. Chandigarh doesn't have many sightseeing places, maybe that's the only downside to it. But it has some places, like the Sukhna Lake and the Rock Garden, which are some of the beautiful places to visit if you are in Chandigarh for a couple of days.