Employees work in a branch of Muthoot Finance Ltd., one of India’s leading providers of gold-based loans, in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

India's Services PMI Drops to 7-Month Low in Sign of Weak Growth

(Bloomberg) -- Expansion in India’s dominant services sector weakened in April ahead of an election, a private survey showed on Monday, suggesting a delayed recovery to Asia’s third-largest economy.

The Nikkei India services purchasing managers’ index fell to a seven-month low of 51 in April from 52 in the previous month on the back of slower increases in new business and output growth. A survey last week showed manufacturing also weakened in April.

India's Services PMI Drops to 7-Month Low in Sign of Weak Growth

“Although the Indian private sector economy looks to be settling into a weaker growth phase, much of the slowdown was linked to disruptions arising from the elections and companies generally foresee improvements once a government is formed," said Pollyanna De Lima, principal economist at IHS Markit, and author of the report.

India’s seven-phase election started in April and will conclude on May 19, with results due on May 23.

The PMI survey showed input costs and output charges remained weak by historical standards, helping to keep inflation anchored well below the central bank’s 4 percent medium-term target. The Reserve Bank of India cut its benchmark rate twice this year.

Earlier on Monday, Kotak Institutional Equities Research cut its growth forecast for the financial year to March 2020 to 6.8 percent from 7.1 percent, citing prospects of a weak monsoon season, subdued rural demand and reduced space for government expenditure.

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