India’s services sector, long the linchpin of its economic dynamism, is showing signs of moderation. The latest data reveals that while the sector continues to expand, the pace of growth is losing steam. A dip in the services PMI to 58.5 in March ~ though still comfortably in expansionary territory ~ signals the first tremors of what could become a broader cooling in economic activity if not addressed thoughtfully. What stands out, however, is the simultaneous decline in inflationary pressure.

Input costs rose at their slowest pace in five months, and output prices increased at the weakest rate since late 2021. While this may seem like a win for consumers, it underscores a deeper malaise: demand is not as buoyant as it once was, and intense competition is eroding pricing power. For a sector as diverse and employment-intensive as services ~ which includes everything from IT and finance to tourism and retail ~ such a squeeze on margins........

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