Service sector activities decline for 2nd consecutive month in Oct: Report Huge potential in services sector: Goyal
NEW DELHI: India's service sector activities declined for the second straight month in October and business confidence was impacted amid concerns that challenging economic conditions might linger, says a report.
The IHS Markit India Services Business Activity Index stood at 49.2 in October and a reading below 50 indicates contraction.
"Indian service sector activity declined for the second straight month in October, the first back-to-back reduction since the second quarter of fiscal year 2017/18.
"New business stabilised, following contraction in September, while job creation moderated. At the same time, concerns that challenging economic conditions will linger dragged business confidence to its lowest level in close to three years," the report released on Tuesday said.
It noted that cost inflation climbed to a one-year high, but charges increased at a softer pace as weak demand limited pricing power.
"However, rising from 48.7 in September, the headline figure was indicative of a marginal and slower rate of reduction. Anecdotal evidence highlighted subdued demand conditions, competitive pressures and a fragile economic situation," the report said.
Citing the October data, the report said it indicated that demand weakness was centred on the domestic market, with exporters posting an increase in international sales while the upturn in external demand was modest and the slowest in four months.
Pollyanna de Lima, Principal Economist at IHS Markit, said it was somewhat worrying to see the Indian service sector stuck in contraction, as firms react to muted demand by lowering business activity.
"Perhaps even more concerning was the downward revision to future expectations, given the possible detrimental impact of subdued business confidence on investment and jobs. The latter already displayed its joint-weakest expansion in over two years," de Lima added. NEW DELHI: The country's services sector has huge potential to generate job opportunities and push economic growth, Commerce and Industry Minister Piyush Goyal said on Tuesday.
He suggested that the ministry, state and industry body CII can work on some kind of policies and enablers to push the growth of 12 champion sectors being identified by the government.
These sectors include accounting, finance, media, entertainment, information technology, health, legal, transport and logistics.
"I have made a suggestion that in the next 15-20 days, if we can work out along with the states, some kind of policy or some kind of enablers which can help these various champion sectors grow and expand much faster and contribute in a much larger way," he said.
He was speaking at the curtain-raiser programme of three-day Global Exhibition on Services (GES) 2019, to be held in Bengaluru from November 26 to 28. It will be organised by the ministry and the Confederation of India Industry (CII).
He said the services sector has huge potential and it contributes in a significant way to the Indian economy. But, "I do not think we have even reached the tip of the iceberg when it comes to getting the true benefits of this sector," he added.
Talking about the Statue of Unity in Gujarat, he said that although some people criticised the government on this project, it has huge potential to generate economic activities around that region.
"My prediction is that Statue of Unity alone will create an ecosystem which can generate Rs 1 lakh crore (USD 15 billion) annually in and around that statue over the next 4-5 years," he added.
Informing about the exhibition, joint secretary in the commerce ministry Darpan Jain said it would provide a platform to showcase opportunities that exist in the 12 sectors in India.