There is a bad news for Services sector, the largest sector of the Indian economy. In spite of claims of the government, a monthly survey showed on Thursday that the economy of the nation is growing with slower pace. Growth rate of the services fell to six-month low in March 2019. Nikkei India Services Business Activity Index PMI fell to 52 in March from 52.5 in February this year, indicating the slowest expansion since September 2018. It happened so due to a slower expansion in new work, leading to weakest rate of hiring.
The author of the report Pollyanna De Lima, Principal Economist at IHS Markit, said, “India’s service sector growth weakened at the end of the fourth quarter of 2019-19, with activity expanding at the slowest rate since last September. “
Despite the moderation, the services PMI was in the expansion territory for the 10th straight month. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
It is worth mentioning that the Purchasing Managers’ Index (PMI) is an indicator of economic health for manufacturing and service sectors. The purpose of the PMI is to provide information about current business conditions to company decision makers, analysts and purchasing managers.
According to Ministry of Statistics and Programme Implementation’s data for 2018-2019 Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at Rs 92.26 lakh crore in 2018-19. Services sector accounts for 54.40 per cent of total India’s GVA of Rs 169.61 lakh crore. With GVA of Rs. 50.43 lakh crore, Industry sector contributes 29.73 per cent. While Agriculture and allied sector shares 15.87 per cent.
Meanwhile, optimism regarding the year-ahead outlook for business activity strengthened for the second month in a row. Lima said, “Business expectations strengthened in March, indicating that services companies are hopeful that conditions will advance in the months to come. However, an anaemic pace of job creation hints that service providers are not fully convinced about a shift into a higher growth gear.”