The services sector in India grew at the fastest pace in six months in January due to strong demand.

This is according to the findings from a business survey, which also revealed output prices increased at their slowest rate since February last year, and optimism stood at a four-month top.

The results show India would retain its title of the fastest-growing major economy within the next few months, allowing the government to concentrate on fiscal consolidation throughout 2024, Reuters news agency reports.

Compiled by S&P Global, the HSBC final India Services Purchasing Managers' Index rose to 61.8 in January from a reading of 59.0 in December.

The final reading also exceeded an initial estimate of 61.2, staying above the 50-level dividing growth from contraction for the 30th straight month.

"New business expanded at a faster pace and managers' expectations for future activity was strong. The new export business index accelerated, signalling that India's services exports remained robust," stated HSBC economist Ines Lam.

Furthermore, the new business sub-index indicated demand increased at the fastest pace since July, with exports at a three-month high. This index has reported growth for two and a half years.

As such, businesses remained optimistic at the beginning of the final quarter of the 2023/24 fiscal year. Confidence amongst businesses for activity for the coming year hit its highest since September, the Reuters report adds.

Additionally, even though operating costs increased at the fastest pace since August, the prices charged rose at the slowest pace in almost a year, signalling an inflation moderation.

Moreover, overall inflation in India rallied to a four-month high in December, staying above the central bank's medium-term target of 4%. Along with robust economic growth, this is set to lead the Reserve Bank of India to hold interest rates steady for a few months.