Moderate expansion of private sector activity in Sep: HSBC
New Delhi: Private sector activity in India inched up fractionally in September amid worrying business sentiments, an HSBC survey said today while calling for a pick up in reform activity to put growth on a firmer footing,
The headline HSBC Composite Output Index stood at 51.8, up fractionally from 51.6 in August, indicating a moderate expansion in private sector output.
Meanwhile, the HSBC India Services Business Activity Index, that tracks changes in activity at Indian services companies on a month-by-month basis, rose from 50.6 to 51.6.
“Services sector activity bottomed out in September thanks to stronger new business flows. However, business sentiment continues to deteriorate after a strong post -election uptick,” HSBC Co-Head of Asian Economic Research Frederic Neumann said.
“A pick up in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation,” Neumann added.
Though the September data indicated growth of Indian private sector activity for the fifth consecutive month, the pace of increase was marginal. A figure above 50 indicates the sector is expanding, while a figure below that level means contraction.
Amid reports of stronger demand, there was signal of growth of new business orders at Indian services firms for the fifth month running in September.
Job creation in the Indian service sector was seen for the first time in three months in September.
Inflationary pressures eased further during the month.
Service sector inflationary pressures from inputs eased in September and were the most muted since November 2009, the survey said.
Likewise, cost pressures in the manufacturing sector softened in September, causing the overall rate of cost inflation to fall to the weakest level since April 2009.
In the last monetary policy, Reserve Bank Governor Raghuram Rajan left all key rates unchanged citing continued risks to inflation and difficult external situation especially on the geopolitical front.
This is the fourth consecutive time that the RBI has kept key interest rates unaltered. The short-term lending rate (repo) rate remained at 8 per cent, and the cash reserve requirement of banks at 4 per cent.