India's service sector contracted at a softer pace in July, survey data from IHS Markit showed on Wednesday.
The services Purchasing Managers' Index rose to 45.4 in July from 41.2 in June. Economists had forecast the index to rise to 49.0.
A reading below 50.0 indicates contraction in the sector.
New work intakes declined for the third month in a row in July and new business from abroad fell at a sharp pace.
New orders and output decreased in July. Employment fell for the eighth straight month, albeit at a softer pace.
Input costs rose further in July and output charges increased at a quicker pace. Outstanding business volume rose after falling in the previous month.
The overall private sector economy shrank for the third month in a row. The composite output index rose to 49.2 in July from 43.1 in June.
"Uncertainty over when the pandemic will end, as well as concerns about inflationary pressures and financial troubles, dampened business confidence in July," Pollyanna De Lima, an economics associate director at IHS Markit, said.
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