Saurabh,
This is part of the reason why I run out of time when I take exams.
For this question, I timed myself and it took me 2:49, which is a little more than you should spend per question. But the way I look at it is, if it costs me 49s over to get a question correct, then I might as well spend it.
Anyway, I don't know of an arithmetic approach, although I am sure there is one - maybe one of the MGMAT wizards will come through shortly and help out.
I didn't get this question in my GMAT Prep exam.
I see what you are saying about just trying 0.5 and moving on. I think perhaps under the time pressures of the test I might have done this also, but when I did it earlier today, I noticed that there would be a difference in the answers when trying a decimal close to 0 and a decimal close to 1.
Sorry I couldn't be of more help.