Services Production Index Launch: MoSPI Introduces New High-Frequency Indicator to Monitor Economic Growth of Dominant Sector

Services Production Index Launch: MoSPI Introduces New High-Frequency Indicator to Monitor Economic Growth of Dominant Sector​

The Ministry of Statistics and Programme Implementation (MoSPI) is poised to launch the Index of Services Production (ISP), a critical new macro indicator. ISP is designed to measure short-term changes in the output volume of the services sector. It will serve as the counterpart to the Gross Domestic Product (GDP)-related Industrial Production Index (IIP).

This monthly indicator aims to provide high frequency data on service performance, strengthening the statistical framework supporting national policy decisions. The ISP focuses specifically on the formal services sector.

Addressing the Rise of the Services Economy​

The necessity of an ISP stems from the overwhelming importance of the services sector in the Indian economy. Since 2013-14, this sector has contributed over 50% of the Gross Value Added (GVA). Consequently, planners and policymakers require a suitable short-term indicator to guide its growth trajectory.

The objective of ISP is two fold: providing economic trends that complement IIP movement, and offering high frequency data on services performance to support analytical frameworks. This information will enable improved economic forecasting and better business cycle analysis for various stakeholders.

Overcoming Historical Data Hurdles​

Historically, compiling a comprehensive, high-frequency ISP proved challenging in India. Unlike manufacturing, where output can be measured physically, many service activities are intangible and lack directly observable output metrics. Key historical roadblocks included limited administrative datasets and the heterogeneity of service activities.

These challenges have now been addressed through significant developments in India's statistical data ecosystem. The availability of high-frequency GST data on outward supplies has made ISP compilation feasible. Furthermore, the Annual Survey of Incorporated Services Sector Enterprises (ASISSE) will provide periodic data crucial for certain sub-sectors.

Methodological Framework and Data Sourcing​

MoSPI has established a robust framework utilizing three principal data sources: administrative/secondary data, GST data, and ASISSE. The ISP is designed as a short-term indicator to measure changes in the real output of service-producing industries relative to the base period.

GST data, specifically aggregated Taxable Value of Sales (outward supplies) from GSTR 1 returns, will be used extensively for value-based indicators across various services like Retail Trade and Telecommunications. For certain sub-sectors, such as Air Transport and Railways, which measure output in physical quantities, no deflator is required.

Deflation Techniques and Base Year Selection​

The ISP tracks short-term changes in the volume of production, not just value. Since primary service data is typically gathered in nominal (value) terms, a price deflator is mandatory to convert this into real (volume) data. The selection of deflators follows international guidelines; Service Producer Price Indices (SPPIs) are preferred when available.

For sub-sectors lacking SPPI data, CPI is used as an acceptable proxy. This choice is supported by the logic that services are consumed almost immediately after production, meaning producer and consumer prices move closely. The proposed base year for trial ISPs has been selected as 2024-25.

Timeline and Scope of Services Coverage​

The ISP encompasses a wide range of sub-sectors including wholesale and retail trade, transport, banking, insurance, and professional services. The initial release focuses on the formal sector, as compilation relies on enterprises registered under GST.

Trial monthly indices for the year 2025-26 and for April 2026 are scheduled to be released on July 14, 2026. Thereafter, regular trial indices will be disseminated with a lag of approximately 60 days on the 29th (or next working day) of every month.

Services excluded from ISP include public administration and Defence activities, financial services outside of Banking and Insurance, social work without accommodation, and personal services provided by private households. Health and Education sub-sectors, which are exempt from GST, will be covered later based on data from the ASISSE surveys.