BANGALORE (Reuters) - Growth in India's dominant service industry stalled last month as new orders came in at a weaker pace, adding to pressure on the government to drive through economic reforms, a business survey showed on Wednesday.
The stagnation came despite firms barely raising their prices - probably writing off any likelihood that Reserve Bank of India will cut interest rates anytime soon to support economic growth.
Any evidence of a slowdown will be disappointing for Prime Minister Narendra Modi, who took over in May, after Asia's third-largest economy expanded a better-than-expected 5.7 percent year-on-year in the quarter ended in June.
The HSBC Purchasing Managers' Index (PMI), compiled by Markit, fell to 50.0 in October from September's 51.6, the lowest in six months and right on the break-even point between growth and contraction.
New Delhi has so far managed to push through only minor reforms to boost the economy and attract investments but last month's success in a couple of state elections could change that.
Modi's government picked up the pace on economic reforms last month and a recent Reuters poll predicted that would drive India's economic growth to its fastest pace in two years in the current fiscal year.
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"The revival of reforms post recent state elections, if sustained, should lift growth on a broad basis," said Frederic Neumann, co-head of Asian economic research at survey sponsor HSBC.
New business growth slowed a five-month low but continued to expand at a modest pace.
Still Wednesday's PMI showed services firms were only able to increase their prices a bit faster last month, pointing to sluggish consumer demand. The prices charged sub-index only nudged up to 50.7 from September's near four-year low of 50.6.
The Reserve Bank of India is not expected to cut its key interest rate to support the economy until well into next year, the Reuters poll found.
Weak inflation - which at 6.46 percent in September was the lowest since figures were first published in January 2012 - will do little to change that view.
(Reporting by Deepti Govind; Editing by Kim Coghill)