Hit by disruptions from a shock ban of high value currency notes and confusion around product pricing after the implementation of a new tax, the services industry had a disappointing fiscal year 2017/18.
Performance in March, the final month of the last fiscal year, was only slightly better.
After taking a big hit in February, the Nikkei/IHS Markit Services Purchasing Managers' Index managed to narrowly push back above the 50-mark that separates growth from contraction, rising to 50.3 last month from 47.8.
"India's service activity stabilised at the end of the quarter, underpinned by a renewed rise in new work. Anecdotal evidence highlighted an improvement in demand conditions," Aashna Dodhia, an economist at IHS Markit wrote in a release.
The new business sub-index that tracks overall demand also returned to growth in March, rising to 50.6 from 48.0 in a reflection of increased levels of new work.
A slower increase in input costs allowed services firms to increase prices at a shallower pace in March, alleviating some of the burden on consumers.
The RBI is expected to keep its policy steady this year but shift to a hawkish stance by end-2018, according to a Reuters poll of economists last week.
Optimism was at an eight-month high, the survey found, which alongside increasing demand pushed firms to hire at the fastest pace since June 2011.
The service industry's bounce offset a slower pace of manufacturing growth and pushed a composite index, which takes into account performance of both sectors, to rise to 50.8 last month from 49.7.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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