[Representational Image]Reuters

On the heels of India's manufacturing sector output seeing an eight month high in March, the services sector's output trumped a twenty-one month high this March. The seasonally adjusted Nikkei India Services Business Activity Index recorded its joint-highest level since June 2014 and pointed to a solid expansion in output, according to a statement

The monthly survey, also called the Purchasing Managers' Index (PMI), reported that the services sector reading rose to 54.3 points from 51.4 in February. 

The points above 50 means an expansion of economic activities in the economy, according to the survey, which also indicated that both manufacturing (with 52.4) and services output have remained conveniently expansionary.

The Nikkei India Composite PMI Output Index, which measures the sum total of all economic activity, climbed to a 37-month high of 54.3 from 51.2 in February.

"March PMI surveys signalled a reassuringly robust end to the financial year for the Indian economy, with sharper increases in new business spurring activity growth in both the manufacturing and service sectors," said Pollyanna De Lima, economist at Markit, the agency that publishes the survey.

However, it noted that employment growth in the service sector remained subdued over two years to see only nominal addition of workforce, despite incoming of new work in the Indian private sector economy. The inflow of work in fact rose for the ninth month running, and was at its fastest pace in over three years.

"With the sole exception of the mild increase in hiring seen among service providers last July, the two surveys (manufacturing and services) collectively have signalled a broadly stagnant labour market for the past two years," said De Lima.

The survey cautioned about an inflationary trend with establishments reporting a rise in input-output costs, while noting that the prices already stood at its highest since May 2015.

Service providers for their part remained optimistic about the year ahead, it said. Their level of confidence was at a nine-month high, hinged to favourable government policies, and forecasts of a pick-up in demand.