India has begun the new financial year on a positive note, registering healthy growth in both manufacturing and services sectors. With an S&P Purchasing Managers’ Index for the services sector at 62 in April up from 57.8 in March, India is right on top of the global chart. For India, the reading is the highest since June 2010. China is at the fourth slot with a drop in the index. China’s services PMI in April slowed at 56.4 compared to 57.8 in March.
The services sector, which includes transportation, hospitality, banking, insurance, communication among others, accounts for more than 50 per cent of India’s GDP. The sector naturally is key for employment generation.
“India’s service sector posted a remarkable performance in April, with demand strength backing the strongest increases in new business and output in just under 13 years. Finance & Insurance was the brightest spot, topping the sectoral growth rankings for both measures,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
For India, the manufacturing PMI has risen too from 56.4 in March to 57.2 in April. A PMI reading is considered an important data point indicating the existing trends of economic activities especially in relation to the manufacturing sector, capturing upstream and downstream activities.
Amid rising global challenges, the PMI growth in the services and manufacturing would be encouraging for India’s policymakers. “This also shows that economic recovery is on track. Importantly, it is an S&P reading, so hopefully nobody can call it one sided,” a government official said.
In fact, Apple Inc’s top boss Tim Cook, who was in India last month to launch retail stores –one in Mumbai and one in New Delhi, said that India will be pivotal for the company.
“There are lot of people coming into the middle class and I really feel that India is at a tipping point,” Cook told analysts on the call. “And the dynamism in the market. The vibrancy is unbelievable,” Cook said while speaking at the earnings call.
What could worry China is the manufacturing PMI. The reading dropped to 49.5 for the month from 50 in March due to weak orders.
A reading below 50 indicates contraction.
Meanwhile, India’s goods and services tax (GST) collection for April has surged to Rs 1.87 lakh crore—the highest ever. In March, it was Rs 1.60 lakh crore.
Also read: GST collections soar to record high of Rs 1.87 lakh crore in April