Index of Services Production
Context : The Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP) in July 2026. It is a new monthly indicator to measure the performance of India’s services sector, similar to the Index of Industrial Production (IIP) for manufacturing. The ISP was designed by a Technical Advisory Committee (TAC) and will initially be released on a trial basis.
About is the Index of Services Production (ISP)
- A monthly macroeconomic indicator developed by MoSPI.
- Measures the real (inflation-adjusted) output of India’s formal services sector.
- Serves as the services-sector equivalent of the IIP.
Need for ISP
- The services sector contributes over 50% of India’s Gross Value Added (GVA).
- India lacked a high-frequency monthly index to monitor services sector growth.
- Fills this important gap in economic data.
Objectives
- Track monthly growth in the services sector.
- Support economic policymaking and planning.
- Improve economic forecasting.
- Complement the IIP for a complete picture of economic activity.
Key Features
- Covers only the formal services sector.
- Excludes government administration, defence, personal services, gambling, and government-run health & education.
- Uses a Laspeyres Volume Index with 2024–25 as the base year.
- Sector weights are based on their Gross Value Added (GVA).
About ISP is Measured
- Measures real service output by adjusting nominal values for inflation.
- Uses turnover as the primary indicator of output.
- Converts nominal values into real growth using price deflators such as CPI and WPI.
Major Data Sources
- Administrative data: Railways, Air Transport, Banking, Insurance.
- GST data: Trade, Transport, Telecom, Hotels, Real Estate, Professional Services, Arts & Recreation.
- ASISSE: Private Health and Education services.
Indicators Used
- Quantity-based: Railways, Air Transport (e.g., passenger-kilometres).
- Value-based: Most other services (turnover, sales, GST data).
Deflators Used
- WPI: Wholesale Trade.
- Sector-specific CPI: Wherever available.
- CPI General: Banking and Insurance.
- CPI Non-Food: Other service sectors.
- Deflators remove the impact of inflation to estimate real output growth.
Trial Implementation
- Trial indices for 2025–26 and April 2026 will be released from July 2026.
- Regular monthly publication will follow after validation, with about a 60-day time lag.
Significance
- Introduces India’s first dedicated monthly index for the services sector.
- Improves monitoring of the country’s largest economic sector.
- Strengthens economic analysis, policy decisions, and growth assessment.
