That's the point! This issue had been cleared with a simple letter to her, or by summon her to the authorities in charge, to clarify issues with the visa application. No arrest warrant, no police...was needed and that actually should be standard procedure in every normal democratic country and for every normal NRI too, not arresting her directly, in public and treating her like major criminals. So that alone shows the overreaction here, but since she is a diplomat, the authorities should have contacted the Indian embassy first and not acted on their own accord like they did.
The news reports also said, that the salary was stated in the visa application to the US embassy in India. If true, they knew that the salary would be lower than usual in the US, before they provided the visa. So it needs to be seen if there was a fraud at all, or if that is an internal issue between the US authorities.