India's economy has experienced a significant slowdown, with GDP growth dropping to 5.4% in the July to September period, which is the lowest in seven quarters and well below the Reserve Bank of India's projection of 7%. This unexpected decline has prompted major financial institutions, such as Goldman Sachs and Barclays, to revise their full-year growth forecasts downward.

Goldman Sachs now estimates a growth rate of 6% for the fiscal year ending in March 2025, down from their previous estimate of 6.4%. Analysts point to weaker-than-expected manufacturing growth as the cause of this "growth shock." Madhavi Arora, lead economist at Emkay Global Financial Services, has also adjusted her forecast from 6.5% to 6%, citing concerns about declining urban consumption and suggesting that any increase in rural consumption may only be temporary.

The disappointing economic data is expected to increase pressure on the government to expedite capital expenditure initiatives.