Yes, but /how much/ was the client offering to pay? This whole situation screams of someone trying to get a cheap deal, then getting mad when the attempted victim wises up. (This is pretty typical with loud-and-proud small business types, IME)
How can one get a "deal" on "throw away interview tasks"? The requested tasks only existed to prove the candidates skill. Paying for the time was above all a method to justify the time usage and show seriousness on the client's part.
The only value created by the interview is the possible hiring of the candidate themselves. There is no room for profitability interviewing candidates "on the cheap".
I think it matters whether or not the amount was explicit, that's not clear in the post. Also, based on the (inexplicably) one time the author mentions the candidate was Indian, it's plausible the latter was wary of being exploited.