New Delhi: The services sector has seen the fastest growth in 11 years due to growing demand, a new survey has revealed. According to a Reuters report, the S&P Global India Services Purchasing Managers’ Index (PMI) stood at 58.9 in May. In April, it stood at 57.9. A PMI above 50 means the sector is expanding.Also Read – RBI Lifts Trade Restrictions on American Express Banking Corp
With that, the PMI has been rising for 10 straight months now, the longest streak since 2018-19. The May 2022 PMI was the highest since July 2011. The rise can be attributed to the government lifting lockdown measures amid falling Covid-19 cases. Pollyanna De Lima, associate director of economics at S&P Global Market, was quoted in the Reuters report as saying: “The reopening of the Indian economy has continued to help drive growth in the services sector.” Also Read – RBI Lifts Trade Restrictions on American Express and Allows Onboarding of New Domestic Customers
Danger of high inflation
However, the report also indicates that expectations remain low due to strong inflationary pressures. According to the report, companies may in future pass the cost burden on to consumers. Countries around the world have been grappling with rising inflation figures, prompting central banks to raise interest rates. Also Read – Debit Card, Credit Card Tokenization Deadline Until Next Month: Here’s How To Tokenize Your Card | Check out the step-by-step guide
The Reserve Bank of India (RBI) announced a surprise rate hike in May. The repo rate was raised by 40 basis points to 4.4% and the cash reserve ratio (CRR) was raised by 50 basis points to 4.5%. With this, the bank aimed to suck Rs 87,000 crore of cash from the Indian economy.
A further rate hike is expected at the next meeting of the Monetary Policy Committee on June 6-8.