The 13 percentage point decline in satisfaction is one of the greatest drops among the 17 nations surveyed by the Pew Research Center in both 2011 and 2012.
"Nearly six-in-ten Indians (59 per cent) say they are dissatisfied with India's direction; only 38 per cent are satisfied," the findings of the poll said.
It said Indians are increasingly gloomy about the economic future, and also worried about their children's economic prospects.
Indian satisfaction now trails that in China (82 per cent), Germany (53 per cent) and Brazil (43 per cent), but still exceeds that in the United States (29 per cent), it said.
Pew said falling satisfaction is coupled with widespread concern about the economy, especially unemployment and rising prices, which roughly eight-in-ten Indians say are very big problems.
Nearly half of Indians (49 per cent) think current economic conditions are good, but such sentiment is down seven percentage points from 2011.
Not surprisingly, Indians with relatively higher incomes are far more likely than those with low incomes to see the economy in a positive light, it said.
According to the Pew poll, the Indian public is also pessimistic about the economy's future.
Just 45 per cent of Indians think the economy will improve over the next 12 months, down from 60 per cent in 2011.
"Again, richer Indians are much more likely than poorer Indians to be optimistic. The public outlook in India is far more circumspect than that of India's emerging market rivals, Brazil (where 84 per cent foresee economic improvement) or China (83 per cent)," it said.
But such pessimism is consistent with a consensus view outside India that recent heady economic gains are now a thing of the past, it said.
In July, 2012, the International Monetary Fund forecast only 6.1 per cent growth in 2012 for India and a 6.5 per cent expansion in 2013.
Both forecasts reflect downgraded expectations just since April, 2012, Pew said.
The Indian public is still upbeat about personal finances.
Nearly two-thirds (64 per cent) think their own economic situation is good.
Despite their increased economic gloom and doubts about their children's prospects, half of Indians say they are better off than they were five years ago, possibly reflecting a one-third increase in gross national income per capita over the same period, the survey results said.