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I wish to travel to China and best budgeted way is to travel via Hong Kong. So do I need a Hong Kong transit visa for that?

Also, If I travel by train, does that require a transit visa ?

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If you are an Indian passport holder, then you do not need a visa to enter Hong Kong and you are allowed to stay there for a maximum of 14 days. Please refer to the link below:

http://www.discoverhongkong.com/in/plan-your-trip/traveller-info/immigration-and-customs/visa-information.jsp

The second part of your question - I am not sure i understand it. Do you wish to travel to Hong Kong from India through train? If that is the case, I am not sure how it works. Either you pass through China or Myanmar (check visa requirements for Indians in Myanmar)

Since I do not know from which part of India you are travelling from I would recommend you take a look at this page on a travel forum for more information

https://www.lonelyplanet.com/thorntree/forums/asia-indian-subcontinent/topics/train-from-delhi-to-hongkong

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