NEW DELHI: While several sectors are facing the heat of inflation, the Indian services sector seems to be beating the trend and has actually fared better than other sectors scoring impressive growth. 

As recorded by the S&P Global Purchasing Managers’ Index (PMI) released on Thursday, in July the sector saw the highest level of activity in 13 years.

It was the highest index reading since June 2010 and has remained above the 50-mark that separates growth from expansion for two years.

Attributing the robust demand in the services sector strength to new business intake, and a pick-up in international sales, the report said that despite inflationary pressure, the services sector activity increased to 62.3 from 58.5 in June. 

A reading above 50 denotes expansion of activity while one below 50 implies a contraction. The report noted the key sources of growth being exports to Bangladesh, Nepal, Sri Lanka and the UAE.

“The resilience of the service sector underscores its vital role in fuelling India's economy, with the PMI results for July so far pointing to a notable contribution from the sector to overall GDP for the second fiscal quarter,” 

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence said that the resilience of the service sector underscores its vital role in fuelling India's economy, with the PMI results for July so far pointing to a notable contribution from the sector to overall GDP for the second fiscal quarter.

De Lima further added, "Looking at PMI price indices in recent months, it seems that competitive advantage continued to support demand for Indian services, with increases in output prices here modest relative to several other nations."

The S&P report however said that the manufacturing sector PMI dipped to 57.7 in July as against 57.8 in June. As a result, the composite PMI - which is a combination of the manufacturing and services indices - was 61.9 from 59.4 in June.

The report added that the finance and insurance sectors showed the best results in terms of business activity and new orders. However, the consumer services and real estate sectors experienced the sharpest increase in input and output costs, respectively.

The International Monetary Fund (IMF) recently forecasted a dip in India's GDP growth over the next two years indicating that India's GDP growth would fall from 7.2% in FY23 to 6.1% in the current financial year, and then rise slightly to 6.3% in FY25. The Reserve Bank of India has however projected 6.5% growth for this fiscal year.