India services growth at 2-yr high

A disappointing May has given way to a much better June for India's services sector.

A disappointing May has given way to a much better June for India8217;s services sector.

The sector expanded at its fastest clip in two years last month,led by increases in business expectations and new orders.

After dipping slightly in May,the HSBC Markit Business Activity Index,based on a survey of 400 firms,rose to 64.0 in June from 58.2 last month,pointing to a substantial rate of growth. Any figure above 50 indicates expansion.

The survey also showed that Indian services companies raised their charges for the seventh month running but that charge inflation rate was still weaker than the 20-month peak in April.

The Reserve Bank of India raised its key short-term lending and borrowing rates by 25 basis points each after the market close on Friday,citing worries over inflation. The move came almost a month ahead of its scheduled review.

Official data last month showed the wholesale price index rose an annual 10.16 percent in May up from 9.59 percent in April,driven mainly by higher food and energy prices.

Policymakers expect inflation to ease on better prospects for crops from good monsoon rains,but rise in fuel prices could drive it higher.

Story continues below this ad

The government which had been mulling a fuel price hike for a while,last month freed up state-subsidised petrol prices and raised the prices of other fuels.

HSBC said its input prices index fell further to a three-month low in June from a 20-month high in April,signalling an easing of price pressures.

All six sub-sectors covered by the survey recorded a rise in new business since May,with post and telecommunications registering the fastest expansion.

Indian billionaire Mukesh Ambani8217;s Reliance Industries made a dramatic return to the telecom business in June by buying Infotel Broadband,the only company to win a nationwide license in the broadband wireless spectrum auction. 1=46.63 Indian Rupee