Activities in the services sector, which dominate the Indian economy, contracted in September to the lowest level in 19 months, showed the widely-tracked IHS Markit purchasing managers’ index (PMI).
The index fell to 48.7 in September from 52.4 in August due to subdued demand. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
This justified the RBI’s monetary policy committee’s stance to cut the repo rate by 25 basis points (bps). In fact, the commentator on PMI had talked about the increasing room for MPC to cut the rate, when the survey got released before