India’s service industries expanded at the fastest pace in a year in January, a private survey showed, after the government overhauled policies to revive economic growth.
The purchasing managers’ index rose to 57.5 from 55.6 in December, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth. Services account for about 57 percent of gross domestic product, Finance Ministry data shows.
The government has opened India’s economy to more foreign investment since September, stepped up efforts to curb fiscal and trade gaps and tried to speed up road, rail and port projects. Prime Minister Manmohan Singh aims to bolster the weakest economic expansion in a decade, a slowdown that led to a central bank interest-rate cut last month.
“A pick up in services needs to be backed up by a lift in industry and there is no indication of that as of now,” Dharmakirti Joshi, chief economist at Crisil Ltd., said before the release. “Inflation pressure is still there and it is something to watch out for.”
Indian GDP my climb as little as 5.7 percent in the year through March 2013, the least since 2002-2003, according to the Finance Ministry.
Inflation eased to a three-year low of 7.18 percent in December, while remaining the fastest in the BRIC group of major emerging nations that also includes Brazil, Russia and China. The Reserve Bank of India cut the repurchase rate to 7.75 percent from 8 percent on Jan. 29.