The performance of Asia's third-largest economy fell short of the 4.9 percent growth that had been expected , and decelerated fractionally from the prior quarter.
In fact, gross fixed capital formation as a share of overall gross domestic product shrank in the December quarter to 27 percent from 29.4 percent in the previous quarter, measured at current prices.
Negative after a 1 percent gain in the previous period. Mining and quarrying also did worse, shrinking by 1.6 percent.
Economists had expected improved farm output to contribute to a slight pickup in overall growth, but the year-on-year pace of growth in agriculture, forestry and fishing slowed to 3.6 percent from 4.6 percent in the prior quarter, the data showed.
Agriculture and industry have both disappointed. With this kind of third quarter numbers, the overall growth for the year looks likely to average around 4.6 percent.
Elevated borrowing costs have added to manufacturers' woes after the Reserve Bank of India (RBI) hiked interest rates three times between September and January to curb stubborn inflation which has showed no signs of easing even as growth tumbled.
While wholesale inflation did slow to an eight-month low in January, the fall was driven by softer food and vegetable prices, which are considered volatile and could head higher again.
The latest figures will make it hard to hit the government's forecast of 5 percent in the fiscal year that ends in March. It forecasts a recovery in growth to near 6 percent for the fiscal year 2014/15.
"From a policy point of view, RBI is focused a lot more on CPI inflation and they have sort of factored in 4.5 to 5 percent GDP growth for this year, so from that perspective RBI will not make any changes.