TOKYO -- The Nikkei India services Purchasing Managers' Index, or PMI, returned to modest growth in December amid signs of recovery from the effects of new goods and service taxes, or GST.
The GST was introduced in July, causing sluggish demand and lower customer turnout at Indian businesses.
The seasonally adjusted business activity index stood at 50.9 in December, up from 48.5 in November.
A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.
The service sector "remained on a weak growth trajectory" amid reports that the GST was still hindering efforts to secure new clients, said Aashna Dodhia, economist at IHS Markit, which compiles the survey.
"Still, the best overall performance of the economy was recorded since October 2016, endorsing the standpoint that the economy is recovering from the implementation of the twin shocks of demonetization and the GST," Dodhia said.
"This expansion was mainly driven by manufacturing companies, with output growth here the sharpest since December 2012," Dodhia added.
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