Index of Services Production

The Government of India has introduced the Index of Services Production (ISP). This new macroeconomic indicator tracks the performance of the services sector. It is the first high-frequency indicator dedicated to measuring the output volume of the formal services sector relative to a base year. Services constitute the largest share of India’s economy. The ISP aims to strengthen economic monitoring, improve national accounts estimation, and support data-driven policy choices. The first sub-sectoral trial index was released for April 2026.

Core Features and Methodology of the Index

Statistical Framework and Timeline

• Base Year: The index uses 2024-25 as its base year. This aligns with other economic indices like the 2024-based Consumer Price Index (CPI) series.
• Release Frequency: The trial indices will be published monthly with a lag of around 60 days. The data will be released on the 29th of each month, or the next working day if the 29th is a holiday.
• Governance: The Ministry of Statistics and Programme Implementation (MoSPI) set up a Technical Advisory Committee (TAC) in May 2025 to create the methodological framework. The committee includes experts from academia, industry bodies, and economic ministries.
• Target Users: Main users include national accounts compilers, economic ministries, policy researchers, and domain experts.

Role of Price Deflators

Primary service data is collected in value terms, combining price changes and real value addition. The ISP uses price deflators to remove price inflation and convert nominal revenue into real volume data.

Coverage and Data Ecosystem of the ISP

Sectoral Expansion and Exclusions

The trial index for April 2026 covers 19 sub-sectors, representing roughly 60% of the services economy. Out of these 19 sub-sectors, 14 achieved double-digit growth in April 2026 compared to April 2025. Specific segments are excluded because they are non-market activities, informal, or tied to core government operations. The excluded sectors include:

• Public administration and defense.
• Financial services excluding banking and insurance (e.g., central bank activities, money market funds).
• Social work activities without accommodation.
• Services of membership organizations and personal services.
• Activities of private households with employed persons.
• Extraterritorial organizations and bodies.
• Government-provided health and education services.
• Gambling and betting activities.

Primary Data Sources

The ISP framework relies on a three-pronged data architecture:

• Administrative Data: Secondary source data covers air transport, railway transport, banking, and insurance.
• Annual Survey of Incorporated Services Sector Enterprises (ASISSE): Launched in April 2026, ASISSE builds a database for the incorporated services sector. It will supply data for private health and private education components once fully available.
• Goods and Services Tax (GST) Data: This marks the first time high-frequency GST data is applied directly to official statistical indices.

GST Data Footprint in ISP

GST records supply high-frequency indicators for several sub-sectors:

• Retail and wholesale trade.
• Repair and maintenance.
• Accommodation and food services.
• Road transport, water transport, warehousing, and transport support activities.
• Postal and courier services.
• Telecommunications, information, and broadcasting.
• Real estate and computer-related services.
• Professional, scientific, technical services, and research & development (R&D).
• Administrative, support services, arts, entertainment, and recreation.

Strategic Relevance of the Services Sector

Economic Indicators and Targets

The Index of Industrial Production (IIP) tracks industrial performance but misses short-term services trends. The ISP plugs this information gap. The importance of tracking the services sector is highlighted by its economic footprint:

• GDP Share: Services have contributed over 50% of India’s Gross Value Added (GVA) since 2013-14. In 2024-25, the services share stood at 52.9% of total GVA.
• Employment: The sector accounts for roughly 30% of total employment across India. It added around 40 million jobs between 2020 and 2026.
• Export Momentum: Services exports reached USD 103.41 billion between April and June of the fiscal year 2026-27, marking a 6.16% year-on-year growth.
• Long-Term Target: The government aims to secure a 10% share for India in global services exports by the year 2047.

Trial Index Performance Data

Short-Term Growth Leaders

Data from the initial trial releases shows specific sub-sectors driving expansion in both monthly and annual brackets.

International Precedents and Macroeconomic Facts

Global Benchmark Frameworks

India’s ISP framework aligns with international statistical criteria. The primary reference guidelines include the Organisation for Economic Co-operation and Development (OECD) Compilation Manual for Index of Services Production (2007) and methodologies from Eurostat, the statistical office of the European Union. Several major economies maintain similar indicators. The United Kingdom compiles a Monthly Index of Services, South Korea utilizes a monthly Service Industry Activity Index, and nations like France, Spain, and Slovenia publish equivalent high-frequency metrics.

Macroeconomic Context Notes

Modernizing the statistical apparatus with high-frequency inputs helps reduce data lags in national income accounting. The integration of formal transactional logs like GST records minimizes reliance on proxy indicators for quarterly Gross Domestic Product (GDP) revisions. This improves the accuracy of quick estimates prepared by the National Statistical Office (NSO). By tracking formal outputs across 19 sub-sectors, the index maps structural transformations, changing consumption patterns, and the formalization of the Indian economy.