Index of Services Production
What’s in the news?
- The Ministry of Statistics and Programme Implementation (MoSPI) has introduced the Index of Services Production (ISP), India’s first macroeconomic indicator designed to measure the performance of the country’s services sector.
- The new index is expected to strengthen economic monitoring, improve national accounts estimation and support evidence-based policymaking.
About ISP
- The ISP will track short-term changes in the volume of output produced by the formal services sector relative to the base year 2024-25.
- ISP will not cover the informal services sector as it is compiled using outward supply of enterprises registered under GST.
- The ISP has been developed using multiple high-frequency data sources, including Goods and Services Tax (GST) data, administrative records and the Annual Survey of Incorporated Services Sector Enterprises (ASISSE). Notably, GST data is being used for statistical applications for the first time.
- The index currently covers sectors such as wholesale and retail trade, transport, telecommunications, information technology, real estate, professional services, accommodation and food services, arts and entertainment, banking and insurance.
- Government-dominated and non-market sectors, including public administration, defence, government health and education, and certain financial activities, have been excluded.
- To ensure accurate measurement of real output, the Ministry will use price deflators, including the Consumer Price Index (CPI) and Wholesale Price Index (WPI), to remove the impact of inflation from nominal service revenues.
Price Deflator:
- The ISP tracks short-term changes in the volume of services produced. Since primary service data is usually collected in value terms, it captures the effects of both the prices and value addition.
- A price deflator is therefore required to remove the effects of change in prices from nominal service revenue.
- A price deflator transforms “value-based” (nominal) data into “volume-based” (real) data, providing accurate measurement of actual changes over time.
- The introduction of the ISP fills a long-standing gap in India’s economic measurement framework, as the existing Index of Industrial Production (IIP) captures only industrial activity and does not reflect short-term trends in the services sector.
- Refer SCA Magazine June Edition for details about IIP.
Did you know?
- The services sector contributes 52.9 per cent of India’s Gross Value Added (GVA) and accounts for nearly 30 per cent of total employment, generating around 40 million jobs over the past six years.
Trail ISP
- The Ministry has also released the first trial ISP for April 2026, covering 19 service sub-sectors, which account for nearly 60 per cent of India’s services economy.
- The trial data showed that 14 of the 19 sub-sectors recorded double-digit year-on-year growth in April 2026 compared with the same month last year.
- Among the fastest-growing segments were accommodation and food services (37.2%), retail trade (30.8%), administrative and support services (28.7%), real estate (27.7%), and telecommunications (22.8%).