Context
- The Ministry of Statistics and Programme Implementation (MoSPI) has finalized the framework for India’s first-ever Index of Services Production (ISP). Designed as the services-sector equivalent to the Index of Industrial Production (IIP), it will shift the measurement of services growth from survey-based sentiment (PMI) to actual statistical output.
About Index of Services Production (ISP)
| Parameter | Key Details |
| Nodal Agency | National Statistical Office (NSO) under MoSPI |
| Base Year | 2024-25 |
| Release Frequency | Monthly (with a 60-day lag, released on the 29th of every month) |
| First Release | Scheduled for July 14, 2026 (for the month of April 2026) |
| Committee | Technical Advisory Committee (TAC) headed by Debjani Ghosh (NITI Aayog) |
| Target Sector | Over 40 service sub-sectors (Banking, Real Estate, Transport, etc.) |
Core Methodology & Data Sources
Unlike the Purchasing Managers’ Index (PMI), which relies on business sentiment surveys, the ISP is an output-based measure utilizing hard statistical data.
- Primary Data Source: The GST Network (GSTN) will serve as the primary source to measure production and outward supplies in formal service activities in real-time.
- Supplementary Data: Sector-specific administrative data from government ministries and regulatory authorities.
- Survey Data: MoSPI’s Annual Survey of Incorporated Services Sector Enterprises (ASISSE) will provide enterprise-level structural data.
Inflation Adjustment (Deflators)
To convert nominal output data into real output, the data must be adjusted for inflation.
- Interim Proxy: MoSPI will temporarily use the Non-food Consumer Price Index (CPI) and sub-sector specific CPI indices.
- Long-term Plan: The Department for Promotion of Industry and Internal Trade (DPIIT) is developing a comprehensive Producer Price Index (PPI) to eventually replace these proxy deflators.
Sectors Excluded from ISP
- Informal Sector: Initially excluded due to severe data constraints, missing nearly 33% of total services Gross Value Added (GVA).
- GST-Exempt Sectors: Sectors that fall outside the GST net, primarily Health and Education (contributing ~10% of services GVA), cannot be fully captured through the primary GSTN data.
About Industrial Production (IIP)?
The IIP is a volume-based macroeconomic indicator that measures short-term changes in the physical production of a basket of industrial goods. Like the ISP, it is compiled and published monthly by the NSO under MoSPI.
Comparison: ISP vs. IIP
With respect to the Index of Services Production (ISP), consider the following statements:
I. The Goods and Services Tax Network (GSTN) serves as the primary data source for measuring production and outward supplies in formal service activities.
II. The index comprehensively captures the entire services economy by including the informal sector and GST-exempt services like health and education.
Which of the statements given above is/are correct?
(a) I only
(b) II only
(c) Both I and II
(d) Neither I nor II
Answer: A
Explanation:
Statement I is correct: The Goods and Services Tax Network (GSTN) serves as the primary data source for the ISP, enabling the real-time measurement of production and outward supplies specifically within formal service activities using hard statistical data.
Statement II is incorrect: The ISP currently excludes the informal sector due to severe data constraints, which accounts for nearly 33% of the total services Gross Value Added (GVA). Additionally, it struggles to capture GST-exempt sectors such as Health and Education.