Indian Service PMI index dropped to record low

India-s service sector which has huge weight in Indian GDP contracted for the second consecutive month in October because of lower global demand. The HSBC Markit Business Activity Index, calculated based on a survey of around 400 firms, dropped to 49.1 in October compared to 49.8 in September. This is the lowest reading since April 2009 and any reading lower than 50 indicates contraction.

Indian service sector has more than 50% weight in Indian GDP and it exports to developed countries around the world. The main reason behind this contraction is the lower services demand from the developed economies amid the current euro zone debt crisis and global economic uncertainty. Though the Service sector PMI dropped in October, the manufacturing sector PMI rose in October because of higher domestic demand.