No buddy.. I never wrote that I didnt use oversize piston. Infact, the mechanic used 2 size bigger.

If u say, I'll wait till 2000kms..
Otherwise I'm contemplating selling the bike & upgrade to a bigger bike if I had to settle for the same fuel efficiency.

So you've already done with most of the primary checks
And don't get much disturbed by others' claims regarding mileage, as it depends on many factors, one vital one among them is "methodology used for checking mileage".
My Splendor was giving me mileage between 55-60 while most of the Splendor users claim above 65.
Between, how do you check mileage?

Also, as Shoeb2015 suggested you can wait for some more kms.

I use Reserve to Reserve method.. As I know most of the people use the same. Its quite difficult to get that 100ml bottle.
I can do with 40 but 32..

32 seems very less for a 150 !!
even 220's seem to deliver in the range of 35-40.
my P150 gives a consistent mileage of 50+ easily.
But since you're experiencing both pickup loss and mileage it rules out the possibility of running lean.
But to be sure check for the spark plug tip colour in your case it should'nt be sooty black.
But since you've mentioned nearly all the points needed for checking.
i think you should also try cleaning the throttle body.
I guess 29K should be the time your bike needs it.
also check for the proper functioning of the TPS(throttle position sensor) on your carburettor(it's on the left side), also known as the reed switch.
and if you're going for the compression test please make sure they also check the ignition timing.

Yes, reserve to reserve can be said to be the best method for bikes, as it will give you some what accurate figures compared to full tank-to-full tank method, 100ml bottle etc. 100 ml bottle test will give you more mileage figures usually, which is inaccurate.

Why did the mechanic use "two size bigger piston"?
Was the bore damaged too much that he had to overbore it to 0.50 oversize ?

Is there any overheating issues ?

If nothing works out even after 2000 kms run-in proceed as follows.

1.Clean the carburetor thoroughly.
2.Clean or replace airfilter.
3.Clean the fuel strainer
4.Replace the spark plug(If not replaced earlier)
5.Check if the reed switch is open circuit
6.Check if both the wheels rotate freely.
7.Lubricate and adjust the chain,replace if worn.
8.Check the CDI by swapping it from other bike.

Get a compression test-If compression is found low.
1.Go to a lathe shop and grind the valves & seat properly.
2.Replace bore and piston with OE size.

That's all I can think as of now.