The HSBC India Business Activity Index fell below the 50 mark for the first time 13 months. It registered 49.6 in May, from 52.4 in April, a markit press release on behalf of HSBC India Services Business Activity Index showed.

"Competitive pressures and natural disasters were blamed for the decrease in new business inflows. Nonetheless, the rate of contraction was marginal overall," the release stated.

With manufacturing order books increasing at the quickest pace in four months,private sector
new work rose. Nonetheless, the rate of expansion was the slowest in the current 13-month sequence of growth," it said.

This reading is not good for the government as economists are arguing that while readings on the ground are not too good, the GDP figures revealed something else.

Commenting on the India Services PMI survey, Pollyanna De Lima, Economist at Markit said, "Disappointing May PMI data for India services indicated that the sector fell back into contraction after experiencing growth for six successive months.

Restrained demand accompanied by sweltering heat and the earthquake led to falling new work. Nonetheless, the sector is expected to see a rebound in coming months, as these factors fade away. Ann upturn in employment combined with improved business confidence further add to the evidence that prospects may brighten."

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