I have factory reset my phone, there is almost a gb of app installation space My 16gb SD Card got corrupted today, so I lost all of my data as I was unable to format it. 

The real problem is, I also factory reset my phone just now, so there is 16gb internal memory amd 1.5gb app installation memory, out of which only 400mb is used. 

When I attempt a download from Google Play Store, they get downloaded completely however while installing, it gives an error message "Insufficient storage". I'm fed up with this issue, I don't know what to do. 

Let me also tell you, my SD Card data was encrypted, so I was unable to format it, should this be a problem. However, I factory reset my phone and now internal memory can do nothing with it. 

My phone is Intex Aqua Power HD running Android 4.4
Ok, try to connect your SD Card to another device and Format/copy out your important files.

If that does not work, use a card reader to access your SD Card on a Windows device and SCAN as appropriate.

It could well be a minor threat and your PC anti-virus could solve.