India's PMI plunges most since 2009 as new tax roils economy

Employees assemble parts of Honda Activa scooter engines in Narasapura, on the outskirts of Bangalore.
Employees assemble parts of Honda Activa scooter engines in Narasapura, on the outskirts of Bangalore.PHOTO: AFP

MUMBAI (BLOOMBERG) - Business conditions in India have deteriorated the most since the global financial crisis as the roll out of a nationwide sales tax disrupted supply and distribution links across Asia's third-largest economy.

The Nikkei India Composite PMI Output Index fell to 46 in July from 52.7 in June, the steepest fall since March 2009, a report showed on Thursday (Aug 3).

Activity in the key services sector plunged to 45.9 from from 53.1 - lowest level since September 2013 - after data showed manufacturing slumped the most since 2009. A reading below 50 indicates contraction.

The data add to evidence of underlying weakness in the world's fastest-growing economy. The central bank on Wednesday cut rates to the lowest since 2010 and urged the government to speed up projects because there's "an urgent need" to boost private investment.