The Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP).
What is the background?
Transformation of Indian economy – India's economy has undergone a structural transformation over the past three decades, with the services sector emerging as its largest contributor.
Increased Contribution of Service sector – Today, services account for over 50% of India's Gross Value Added (GVA), making them the primary driver of economic growth, employment, investment, and exports.
Concerns – Despite this dominant role, India has lacked a comprehensive high-frequency indicator to measure monthly changes in services sector output, unlike the Index of Industrial Production (IIP) for manufacturing and industry.
Idea of ISP – The Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP) With base year 2024–25.
Initially released as trial indices from July 2026, the ISP represents a major reform in India's statistical architecture and aligns the country with international best practices in economic measurement.
Need for the ISP – The services sector has become the backbone of the Indian economy through rapid expansion in banking, telecommunications, trade, transport, hospitality, information technology, real estate, and professional services.
However, policymakers have traditionally relied on quarterly GDP estimates and indirect indicators to assess its performance.
Limitation of existing data – The absence of a monthly services output indicator created several limitations:
Lack of timely assessment of economic activity.
Difficulty in identifying sector-specific slowdowns.
Inadequate support for short-term monetary and fiscal policy decisions.
Limited data for business cycle analysis and economic forecasting.
The ISP seeks to fill this critical statistical gap by providing a monthly measure of real output growth in the formal services sector, similar to the role played by the IIP in the industrial sector.
What is the Index of Services Production?
Index of Services Production (ISP) – It is a short-term volume index that measures changes in the real output produced by service industries relative to a specified base year (2024–25).
Unlike nominal turnover, the ISP measures real production after removing the effect of price changes, thereby reflecting actual changes in service output over time.
Primary objectives:
To complement the Index of Industrial Production (IIP).
To strengthen India's short-term macroeconomic indicators.
To provide high-frequency information on the services sector.
To support evidence-based policymaking and economic analysis.
Institutional Framework – Recognising the complexity of measuring services output, MoSPI constituted a Technical Advisory Committee (TAC) in May 2025 under the chairpersonship of Debjani Ghosh, Distinguished Fellow, and NITI Aayog.
What are the sectors included and excluded in ISP?
Coverage of the ISP – The ISP primarily covers the formal services sector, using administrative and GST-based data.
Major sectors included:
Wholesale and retail trade
Repair and maintenance services
Road, rail, water and air transport
Warehousing and logistics
Banking
Insurance
Telecommunications
Hotels and restaurants
Real estate
Information technology and computer services
Professional, scientific and technical services
Administrative and support services
Arts, entertainment and recreation
Sectors to be Included Later
Health services (excluding government)
Education services (excluding government)
They will be incorporated after sufficient data become available through the Annual Survey of Incorporated Services Sector Enterprises (ASISSE).
Services Excluded from the ISP – Certain services are excluded because they are predominantly non-market activities, government services, or difficult to measure through market transactions.
These include following sector:
Public administration and defence
Government health and education
Central banking activities
Social work without accommodation
Membership organisations
Personal services
Household services
Extraterritorial organisations
Gambling and betting activities
What are the data sources used in ISP?
Administrative Data – Used for sectors where reliable operational statistics already exist, Air transport, Railways, Banking and Insurance.
Goods and Services Tax (GST) Data – GST outward supply data from GSTR-1 forms the backbone of ISP for most service industries.
Coverage includes, trade, hospitality, telecommunications, information technology, professional services, real estate, logistics, administrative services and entertainment.
Importantly, MOSPI uses aggregated service accounting code (sac)-wise data, ensuring confidentiality of individual taxpayers.
Annual Survey of Incorporated Services Sector Enterprises (ASISSE) – ASISSE will provide benchmark estimates for sectors that are largely GST-exempt, particularly, Health and Education.
What are the benefits of the ISP?
Better Macroeconomic Monitoring – It provides timely assessment of service sector performance between quarterly GDP releases.
Improved Policy Formulation – Government and RBI can respond more quickly to sector-specific economic changes.
Stronger National Accounts – ISP will improve estimation of quarterly and annual GDP by supplying robust high-frequency indicators.
Enhanced Business Cycle Analysis – Economists and researchers can identify cyclical turning points earlier.
Better Investment Decisions – Businesses gain access to reliable monthly information on sectoral trends.
International Comparability – The ISP aligns India with advanced statistical systems followed in many developed economies.
What are the challenges ahead?
Coverage is restricted largely to the formal sector.
Informal service activities remain outside the index.
Dependence on GST data may be affected by compliance behaviour.
Limited availability of Service Producer Price Indices reduces methodological precision.
Health and education sectors will initially remain partially uncovered.
Continuous refinement of SAC-NIC mapping will be necessary.
These issues are expected to improve gradually as administrative databases become more comprehensive.
What lies ahead?
The Index of Services Production (ISP) represents one of the most important statistical reforms in recent years.
By providing a monthly measure of real services sector output, it complements the Index of Industrial Production and fills a long-standing gap in India's macroeconomic data framework.
Leveraging GST-based administrative data, modern statistical methods, and internationally accepted practices, the ISP will significantly strengthen economic surveillance, policy formulation, forecasting, and national accounts compilation.
As India's economy becomes increasingly service-driven, the ISP is poised to become an indispensable tool for policymakers, researchers, businesses, and investors, contributing to more informed and evidence-based governance.
