Store owner Vivek Sharma has seen a dramatic dropoff in spending in the lead-up to the Diwali festival. Changing economic circumstances have seen India's new middle class reducing its spending habits. (Graham Crouch/For The Washington Post)

Just outside India’s capital, partially finished high-rises line the smog-veiled skyline, concrete monuments to the aspirations of the country’s middle class.

They are among the hundreds of developments aimed at the rising ranks of home buyers — two- and three-bedroom units in buildings with air conditioning, washer-dryers and security booths. Real estate agents’ billboards tout the “V.V.I.P. way of life.”

But as Asia’s third-largest economy has slowed in recent months, buyers in places such as Ghaziabad have vanished, capital has dried up, and some projects have been slowed, stalled or even abandoned.

A decade of rapid growth propelled tens of millions of Indians from poverty into a middle class that now numbers 200 million to 300 million, an extraordinary social transformation in this nation of 1.2 billion. But these days, the optimism that once inspired slogans such as “India Rising” is fading.

The economy is expected to grow only 4 or 5 percent this year, not enough to create the salaried jobs needed for the country’s expanding workforce. The rupee fell to a historic low against the dollar in August. Prices for staples such as fuel and onions have skyrocketed. India’s economic woes have had “significant spillover effects” on the rest of South Asia, home to the world’s largest concentration of poor people, according to a recent World Bank report.

Ghaziabad offers a glimpse of a country where the middle-class dream is on hold.

“People are frustrated,” said Prashant Mehrotra, 38, a hospitality industry employee who was supposed to move with his family into a new flat more than two years ago but is stuck in a rental waiting for construction to be finished. The brochure for his development, called Ajnara Integrity, promises two pools, a Zen garden, a cricket lawn and a sun plaza.

Nearby, real estate salesmen sit idly in booths and fan away flies, waiting for customers who rarely come. Others crowd the road, dodging horse-drawn carts and new-model sedans, waving shiny brochures.

Ramesh Kumar, 35, was manning the new vegetable stand he had set up to augment income from his struggling vegetarian food stall. He quit his job as a car salesman four years ago, banking on the soaring construction in the Raj Nagar neighborhood of Ghaziabad for his future. Now he’s borrowing money from his father to keep afloat.

“I thought this was an up-and-coming area,” he said. “With so many flats coming in, I thought there would be lots of buyers. That did not happen.”

Disillusioned group

Over the past decade, new economic policies and a boom in India’s information-technology and business-services industries fueled expansive growth of the economy — 8 percent per year on average from 2003 to 2012. But recently, a spike in inflation, high interest rates, infrastructure problems and a series of government corruption scandals have slowed the momentum of the world’s most populous democracy.

Most experts — including India’s new central-bank governor, Raghuram Rajan — expect that the economy will improve next year, partly because of a strong monsoon season that would help agriculture and because of new government measures to help restart stalled infrastructure projects.

“We need to change the perception about India,” Rajan said last month in Washington. He acknowledged that India had inflation problems, financial-sector turmoil and slower-than-desired growth. “These are issues we need to deal with,” he said. “But these are not crisis issues.”

Still, the implications of the economic deceleration are profound. Rajesh Shukla, a statistician with the nonprofit Institute for Human Development, estimates that slowing growth will prevent as many as 9 million Indians living in poverty from entering the middle class in the next few years.

Many of the country’s new consumers say the rising costs of fuel and food, combined with the weak rupee, have forced them to put off major purchases such as homes and cars and to cancel long-planned vacations. They are people who once saw goods such as air conditioners and smartphones as luxuries. Now, these items are viewed as necessities.

“The middle class has given up on some of their dreams or postponed the fulfillment of their dreams for the time being until the situation improves and they feel more confident of their incomes and the economy,” said Alam Srinivas, author of the book “The Indian Consumer.”

Simant Singhal, 29, an IT professional from Delhi, said he and his wife have decided to delay starting their family because of the uncertainty.

“She does not want to have children anytime soon as she is working, too, and would like to save enough to give a decent life to our children,” he said.

In recent days, Indians crammed markets, malls and bazaars to buy clothes, electronics, colorful candleholders and sweets during the busiest shopping season of the year — the run-up to Diwali, the Hindu festival of lights, celebrated this past Sunday. But some shoppers said they were not spending as they had in the past.

In the Home Ways store in the busy Sarojini Nagar market, customers were ignoring the $500 flat-screen TVs — with “powerful and vibrating sound for India” — to try out more-practical gifts, such as steam irons.

Shopping in the market with his wife and two daughters, Sudhir Kochhar, 36, a banker, said he has grown disillusioned about India’s promise.

“I don’t expect things to get better in the near future,” he said.

Kochhar had once hoped to buy a second home as an investment, but with prices rising, he can’t even afford to pay for his life insurance. He dreams of immigrating to Europe or the United States.

‘A huge shock’

For millions of Indians, attaining a better life has meant leaving the traditional caste and social structures of a small town for a degree and professional job in cities such as Bangalore, New Delhi and Mumbai. Many such Indians in their 20s and 30s find it difficult to remember another time when the country’s fortunes weren’t rising.

The economic slowdown “was a huge shock for the middle class,” said Srinivas, the author. “There was a sense that nothing could go wrong.”

Rajshree Chouhan, 20, an English tutor and film student, was the first in her family to leave her small ancestral village in the western state of Rajas­than. She felt that as a woman, she had more opportunities in a big city. In New Delhi, she was able to fulfill her ambition of hosting a radio show and had dreams of buying a car, as well as a camera for her film class. For now, though, she navigates the city on a scooter.

She said rising food prices have left her and her fiance, an employee of a debt collection agency, strapped for cash. They have stopped eating out, she said, and she has quit buying brand-name clothes such as Levi’s jeans.

“It does surprise me,” she said. “At first, I was like, ‘Why is this happening?’ ” But now, the couple is focused on simply surviving.

Her fiance, Piyush Singh, 27, the son of a civil servant from eastern India, said he wonders whether he will ever be able to afford to further his education beyond high school — which would pave the way for him to achieve more than what his father and grandfather have.

“Even today, I dream of shifting a level up. Everyone does in life,” he said. “The middle class always has hopes.”

Suhasini Raj contributed to this report.