India’s services industry growth dips in May 2016
The Dollar Business Bureau
India’s services industry growth dipped to a six-month low in May due to lack of new orders.
The country’s services industry has been facing weak scenarios, with output growth losing momentum for the second straight month. The total growth in manufacturing and services sectors was the lowest since November last year.
In the last quarter of financial year 2015-16, India was the world’s fastest growing economy, with its gross domestic product (GDP) growing at a quicker-than-expected pace of 7.9%.
Earlier this year, the RBI had cut its policy rate by 0.25% to 6.5%, its first rate cut after six months. It has reduced its policy rate by 1.5% since January15.
The industry demands for more rate cuts from the RBI to increase foreign investment in the country. The Indian banking body will decide about policy rate in its next policy meet to be held on June 7.
The RBI is not likely to cut rates during the next policy meet, particularly after India’s retail inflation increased to 5.39% in April.
Despite the unexpected slowdown in the global economic outlook, the industry is expecting a considerable growth in its manufacturing and services sectors, with the business expectations sub-index firmly in positive territory.
In May, domestic output of a few product categories, including post & telecommunication, transport and storage, and financial intermediation, had registered a significant raise.