NEW DELHI: The first-ever index of services production (ISP) is set to be released around July 2025, complementing the new index of industrial production (IIP) series, which will come out on June 1 with the revised base year 2022-23.
What is the Services Production Index?
This new index, which has been in development for several years, will help assess short-term movement in production in the dominant services sector. The services sector now contributes more than half of India’s GDP and generates millions of jobs.
“There will be a two-month lag in the series initially, as it will provide data for April. The index will be useful for augmenting the list of indicators used for compilation of quarterly estimates, first and second advance estimates and the provisional estimates of national accounts as well,” an official told TOI.
Data Sources and Methodology
ISP will largely be based on the goods and services tax network (GSTN) database, apart from administrative data from ministries and regulatory bodies. “Earlier attempts were thwarted due to limited data availability. Adoption of technology and digitalisation of administrative and secondary data sources, along with GSTN, have emerged as a powerful data source for production and outward supplies across different sectors of the economy,” the official said.
Currently, analysts rely on the HSBC Services Purchasing Managers’ Index (PMI) to gauge monthly momentum in the services sector. However, PMI is a sentiment-based survey that measures whether managers feel business is expanding or contracting, and does not look at actual activity level.
Draft Consultation Paper
Recently, the statistics ministry released a draft consultation paper outlining the methodology being used for preparing ISP for stakeholder feedback. Among other things, the paper proposed a temporary exclusion of the health and education sector, which accounts for 10% of services GVA, until results of the annual survey of incorporated service sector enterprises are available.
This new index is expected to provide more accurate and timely data for policymaking and economic analysis, helping India better track the performance of its largest economic sector.
