Proposal for Index of Service Production (ISP)
The National Statistics Office (NSO) has proposed the creation of an Index of Service Production (ISP) using aggregated goods and services tax (GST) data. This initiative aims to monitor the progress of the services sector, with 2024-25 set as the base year.
Rationale for ISP
- The services sector contributes over 50% to India's gross value added (GVA).
- Currently, there is no index to provide economic trends similar to the Index of Industrial Production (IIP) that could track short-term movements in the services sector.
- ISP would complement the IIP for a comprehensive view of economic trends.
- The absence of a high-frequency indicator is a gap in effectively tracking the services sector.
Data Sources and Coverage
- The ISP will utilize three primary data sources targeting formal sector coverage:
- 1. GST Data: Monthly outward supplies from GSTN returns will serve as turnover proxies for sub-sectors like trade, transport, IT, and hospitality.
- 2. Secondary Administrative Data: Collected from sector-specific ministries.
- 3. Annual Survey of Incorporated Services Sector Enterprises (ASISSE): Provides GVA, turnover, and employment estimates for incorporated entities.
Use of Deflators
- Primary deflators will be service Producer Price Indices (PPIs) for sub-sectors such as banking, insurance, and telecommunications.
- In the absence of PPIs, sector-specific Consumer Price Indices (CPIs) will be used.
Challenges and Importance
Standardizing output indicators for the diverse services sector is challenging, yet crucial for compiling a comprehensive ISP. The necessity for such an index stems from the sector's significant impact on the economy, requiring a robust statistical framework to support policy-making and analysis.
