ETV Bharat / business

India's services sector activity contracts for first time since May 2018: PMI

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Published : Jul 3, 2019, 4:32 PM IST

"The latest PMI results for India bring some concerns over the sustainability of the relatively robust growth rates seen at the start of the year, and the ability of companies to create jobs," said Pollyanna de Lima, Principal Economist at IHS Markit.

India's services sector activity contracts for first time since May 2018: PMI

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New Delhi: The country's services sector activity in June contracted for the first time since May 2018 as weak sales, competitive pressures and unfavourable taxation hampered output, a monthly survey showed on Wednesday.

The IHS Markit India Services Business Activity Index fell to 49.6 in June, down from 50.2 in May, as broadly stagnant sales caused the first drop in business activity in over a year.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

"The latest PMI results for India bring some concerns over the sustainability of the relatively robust growth rates seen at the start of the year, and the ability of companies to create jobs," said Pollyanna de Lima, Principal Economist at IHS Markit.

In the service sector, there was an outright contraction in business activity which was prompted by broadly stagnant sales.

"It's somewhat surprising to see some companies linking subdued demand to high tax rates, two years on from the GST implementation, with the hotel tax mentioned in particular," Lima said.

Read more:Budget 2019: Will Kolkata's jute industry get boost?

Meanwhile, the IHS Markit India Composite PMI Output Index, that maps both the manufacturing and services industry, fell from 51.7 in May to 50.8 in June -- its lowest mark in over a year.

"Looking at the opening quarter of fiscal year 2019/20, we see the slowest upturn in private sector output since the last quarter of fiscal year 2017/18, which dragged employment growth down to a notable extent," Lima said.

Going forward, Indian service providers are hopeful of an improvement in demand conditions.

"Services companies are hoping that some stimulus will boost demand in the coming months, translating into output growth, though confidence about the future also started to fade," Lima said.

Experts believe that the Reserve Bank of India (RBI) will continue with its dovish stance in its upcoming policy review in August to boost slowing economic growth.

In the June review, RBI had cut key lending rates by 0.25 per cent for the third time this year to spur economic growth.

New Delhi: The country's services sector activity in June contracted for the first time since May 2018 as weak sales, competitive pressures and unfavourable taxation hampered output, a monthly survey showed on Wednesday.

The IHS Markit India Services Business Activity Index fell to 49.6 in June, down from 50.2 in May, as broadly stagnant sales caused the first drop in business activity in over a year.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

"The latest PMI results for India bring some concerns over the sustainability of the relatively robust growth rates seen at the start of the year, and the ability of companies to create jobs," said Pollyanna de Lima, Principal Economist at IHS Markit.

In the service sector, there was an outright contraction in business activity which was prompted by broadly stagnant sales.

"It's somewhat surprising to see some companies linking subdued demand to high tax rates, two years on from the GST implementation, with the hotel tax mentioned in particular," Lima said.

Read more:Budget 2019: Will Kolkata's jute industry get boost?

Meanwhile, the IHS Markit India Composite PMI Output Index, that maps both the manufacturing and services industry, fell from 51.7 in May to 50.8 in June -- its lowest mark in over a year.

"Looking at the opening quarter of fiscal year 2019/20, we see the slowest upturn in private sector output since the last quarter of fiscal year 2017/18, which dragged employment growth down to a notable extent," Lima said.

Going forward, Indian service providers are hopeful of an improvement in demand conditions.

"Services companies are hoping that some stimulus will boost demand in the coming months, translating into output growth, though confidence about the future also started to fade," Lima said.

Experts believe that the Reserve Bank of India (RBI) will continue with its dovish stance in its upcoming policy review in August to boost slowing economic growth.

In the June review, RBI had cut key lending rates by 0.25 per cent for the third time this year to spur economic growth.

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CNG price in Delhi hiked by 90 paise, 7th increase since April'18
New Delhi, Jul 3 (PTI) CNG price in Delhi and its suburbs was Wednesday hiked by about Re 1 per kg, the seventh increase in rates in 15 months.
Indraprastha Gas Ltd, the sole supplier of CNG to automobiles in the national capital region, said the increase was warranted because of "recent changes in transmission tariffs of gas pipeline."
CNG price in Delhi was raised by 90 paise per kg to Rs 46.60. The increase in adjoining Noida, Greater Noida and Ghaziabad was Re 1 per kg to Rs 52.95.
CNG rates in Rewari, Gurugram and Karnal in Haryana have been raised by 95 paise. "The price of CNG being supplied by IGL in Gurugram and Rewari would be Rs 58.45 per kg and in Karnal, it would be Rs 55.45 per kg," IGL said in a statement.
This is the 7th increase in CNG prices since April 2018. CNG price was last hiked in April by Re 1 per kg because of the rise in the price of domestic natural gas and fall in rupee value against the dollar.
In all, rates have gone up by Rs 6.89 per kg since April 2018.
IGL, however, did not raise the price of piped natural gas it supplies to households in these cities for cooking purposes. Piped natural gas (PNG) currently costs Rs 30.50 per standard cubic meter in Delhi and Rs 30 in Noida, Ghaziabad and Greater Noida.
Rates of CNG and PNG vary in different cities due to the incidence of local taxes.
IGL said it will continue to offer a discount of Rs 1.50 per kg in the selling prices of CNG for filling between 12.00 am to 6.00 am at select outlets in Delhi, Noida, Greater Noida, and Ghaziabad.
"Thus, the consumer price of CNG would be Rs 45.10 per kg in Delhi and Rs 51.45 per kg in Noida, Greater Noida and Ghaziabad during 12.00 am to 6.00 am at the select CNG stations," it said.
The revision in retail prices of CNG has been effected after an increase in transmission tariff of gas pipeline and an increase in operating expenses since the last price revision.
"However, this increase would have a marginal impact on the per km running cost of vehicles. For autos, the increase would be around 3 paise per km, for taxi it would be 5 paise per km and in case of buses, the increase would be 28 paise per km," IGL said.
"With the revised price, CNG would still offer over 52 per cent savings towards the running cost when compared to petrol driven vehicles at the current level of prices. When compared to diesel driven vehicles, the economics in favour of CNG at the revised price would be over 30 per cent," it said.
IGL sells CNG to over 10.5 lakh vehicles in the national capital region through a network of over 500 CNG stations. It also supplies PNG to over 11.20 lakh households in Delhi and NCR towns. PTI ANZ ANZ
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