A private survey showed that India's dominant services industry has expanded at its fastest pace since a decade on improving domestic demand despite high inflation, making firms to take on staff at a rate that was not seen since the beginning of the epidemic.
The IHS Markit Services Purchasing Managers' Index rose to 58.4 last month from 55.2 in September, which was above the 50 mark separating growth from contraction for a third straight month.
The survey shows that Asia's third-largest economy is on a recovery path, but rising prices could make it easier for the Reserve Bank of India to increase interest rates earlier than expected, putting the brakes on growth.
The rise in prices charged for the provision of services in India had no detrimental impact on demand, as companies signaled the strongest expansion in new business over the last decade, said Pollyanna De Lima, a economist associate director at IHS Markit.
The costs of fuel and material costs went up last month as a result of higher fuel and material costs, which encouraged companies to pass on some of the extra cost burdens to customers.
The rise in global crude prices to near $85 a barrel is the reason for inflation to be elevated, as the biggest increase in transport and storage costs was seen as a result of the recent surge in global crude prices.
Despite demand increasing at the strongest pace of 10 years, business confidence remained muted despite demand increasing at the strongest pace in 10 years.
Service providers were concerned that persistent inflationary pressures could deter growth in the coming year, De Lima said.
According to a poll taken last month, the central bank is expected to increase interest rates at the beginning of the next financial year.
The subindex started in September 2014, and international demand remained in contraction territory for the 20th month in a row. The pace was moderate, but it was the highest since February last year, although hiring continued for a second month. A large majority of firms didn't hire more, saying they had enough head count to handle the workload.
The composite index rose to a near 10 year high in October from 55.3 in September, due to expansion in both manufacturing and services activity.
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