First Index of Services Production (ISP)

Context

The Ministry of Statistics and Programme Implementation (MoSPI) has released India's first trial Index of Services Production (ISP) for April 2026. The index shows strong growth in the formal services sector, with 14 of 19 sub-sectors recording double-digit growth. Accommodation & food services grew by 37.2%, retail trade by 30.8%, while air transport declined 13.9% and railway transport 0.4%.

About the Index of Services Production (ISP)

• Core Concept: A high-frequency monthly index measuring changes in the real output of India's formal services sector. It complements the Index of Industrial Production (IIP) for industry.
• Coverage & Horizon: Covers 19 formal service sub-sectors, representing about 60% of the services economy, and will be released on the 29th of every month with a 60-day time lag.
• Methodological Framework: Developed by the Technical Advisory Committee (TAC) with 2024–25 as the base year, using a fixed-weight Laspeyres Volume Index based on Gross Value Added (GVA).
• Primary Data Feeds:
  • Market Services: GST turnover data.
  • Regulated Sectors: Administrative data from Civil Aviation, Indian Railways, RBI, and IRDAI.
  • Upcoming Coverage: Annual Survey of Services Sector Enterprises (ASISSE) data for health and education.

Significance vs. Limitations of the ISP

Significance

• Economic Representation: Provides a timely measure of service-sector activity, supporting monetary policy and economic assessment.
• Policy Formulation: Offers detailed data across 19 sub-sectors, enabling targeted policy interventions.
• Statistical Benchmarking: Aligns India's service-sector statistics with international practices followed by the Eurozone, UK, and Japan.

Limitations

• Limited Coverage: Excludes the informal services sector, which contributes nearly 33% of services GVA.
• Partial Sector Coverage: Currently captures only 60% of the services economy, excluding key sectors like health and education.
• Limited Historical Data: As a new index, it lacks long-term data for analysing business cycles and trends.

Conclusion

The Index of Services Production fills a major gap in India's economic statistics by providing monthly insights into a sector contributing over 55% of India's GVA. Although coverage remains incomplete, the ISP marks an important step towards more timely, evidence-based economic policymaking.