New Delhi: The country’s services sector activity fell to a seven-month low in April owing to softer rise in new business and disruptions arising from the elections, a monthly survey showed Monday.However, predictions that economic conditions will normalise after the elections underpinned optimism regarding the outlook and supported a stronger upturn in employment. The seasonally adjusted Nikkei India Services Business Activity Index, fell from 52 in March to 51 at the start of the 2019 financial year, pointing to the weakest upturn in output since last September.
“Although the Indian private sector economy looks to be settling into a weaker growth phase, much of the slowdown was linked to disruptions arising from the elections and companies generally foresee improvements once a government is formed,” said Pollyanna De Lima, Principal Economist at IHS Markit, and author of the report.
The general election, that began on 11 April, is currently underway. Votes will be counted on 23 May. However, the poll was not the only reason cited for the slowdown. In the service sector, competitive conditions and a shift towards online bookings among customers reportedly restricted new business gains and in turn growth of activity, Lima said.
On the prices front, the report said that rates of inflation for input costs and output charges remained weak by historical standards. “Another key takeaway from the latest results is the lack of inflationary pressures in both the manufacturing and service sectors, which coupled with slower economic growth offers room for a further cut to the benchmark repurchase rate,” Lima said.