Australia are crashing towards one of their heaviest defeats, with their bid to regain the Border-Gavaskar trophy in tatters even before the end of the first of five Tests in the series.
Shastri led India to victories on their last two tours of Australia in 2018-19 and 2020-21.
The former allrounder was stunned when he heard comments from Josh Hazlewood about the star quick already turning his attention to the second Test.
Hazlewood fronted the media after day three when Australia were in complete disarray at 3-12, chasing a record 534.
The No.11 will still need to bat on Monday as Australia attempt to pull off the greatest comeback in cricket history.
"What the Indian dressing room will be thinking when they hear something like that is we know there are some cracks on the pitch, but there are some mental cracks as well in the opposition," Shastri said on Fox Cricket on Monday.
"Having come to Australia for 30-40 years, I think this is the first time an Indian team is feeling that, you know what 'we're better than the opposition' in their own backyard.
"I don't think an Indian team has ever thought that way.
"Quietly at the back, they're thinking we'll have to lose it from here.
"If we stick to what we're doing well, and execute properly then we have the upper hand."
Former England captain Michael Vaughan said he was "staggered" by Hazlewood's comments.
"Publicly, I've never heard an Australia come out and divide the camp as batters and bowlers," Vaughan told Fox Cricket.
"To publicly see a player basically say I'm thinking about the next game before this game has finished ... I've never, ever seen that from an Australian player."
Josh Hazlewood had figures of 1-28 off 21 overs during India's second innings in Perth. (Dean Lewins/AAP PHOTOS)
Australia keeper Alex Carey defended the team's preparation for this series after not playing a Test since March.
"Personally, I played a lot of Shield cricket leading into this game," Carey said on SEN.
"I played seven or eight games before coming over here.
"This group has been really well managed.
"We are very professional, very calm and very consistent and came into this game ready to go."
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