India's services economy will suffer from clampdown on cash says private survey

A cycle-rickshaw puller pedals past the Delhi Stock Exchange in New Delhi on Nov 30, 2016.
A cycle-rickshaw puller pedals past the Delhi Stock Exchange in New Delhi on Nov 30, 2016. PHOTO: AFP

MUMBAI (Bloomberg) - India's economy will be hurt in the aftermath of Prime Minister Narendra Modi's shock clampdown on cash, a private survey signals.

The Nikkei India Services Purchasing Managers' Index was at 46.7 in November, a report showed on Monday, the lowest since December 2013 and below the 50-mark, which indicates contraction.

Services contribute about 60 per cent to the US$2 trillion (S$2.8 trillion) economy. "New business declined for the first time since June 2015, leading to a solid reduction in activity," the report said. "Inspite of the falls in output and new orders, optimism regarding future activity improved. Input costs were broadly unchanged, whereas prices charged decreased slightly."