NEW DELHI: India’s services sector, which took a hit following the rollout of the goods and services tax (GST), has rebounded, says a monthly survey. The Nikkei India Services PMI Business Activity data for December rose to 50.9 in December from 48.5 in November, on the back of rebound in new orders. A reading above 50 indicates economic expansion.
“India’s service economy showed signs of recovery as it returned to marginal expansion in December,” said Aashna Dodhia, economist at IHS Markit and author of the report. The growth in the sector was attributed to improved demand conditions in sectors like information & communications and finance & insurance.
These, along with lower inflationary pressures pushed the output from the negative zone. Even as overall business activity showed an uptick, it was still muted as the sector continued to suffer from disruptions. “Greater backlogs continued to accumulate as a result of cash shortages and delayed payments that stemmed from the disruption of recent structural reforms,” the report noted.