Introduction to the Index of Services Production (ISP)
India has introduced the Index of Services Production (ISP), a new monthly indicator measuring changes in the output of the services sector. Released by the Ministry of Statistics and Programme Implementation (MoSPI), it complements the Index of Industrial Production (IIP) by offering a high-frequency measure of services sector activity.
Purpose and Development
- The ISP serves as a short-term indicator of changes in the volume of output produced by the services sector relative to a base year.
- The first experimental ISP, with 2024-25 as the base year, was released for April 2026.
- The ISP was developed under the guidance of the Technical Advisory Committee on Index of Services Production (TAC-ISP) formed in May 2025.
Why ISP was Introduced
- The services sector accounts for more than half of India's economic activity.
- The ISP addresses the lack of a monthly indicator for tracking short-term movements in services output, unlike the IIP for manufacturing, mining, and electricity.
- It aims to strengthen India's macroeconomic statistical framework by providing regular data on services production.
Insights from the First ISP
The first experimental ISP for April 2026 indicates broad-based growth across the services sector, with the majority of sub-sectors experiencing significant growth.
- 14 out of 19 sub-sectors recorded double-digit year-on-year growth.
- Accommodation and food services saw a 37.2% increase, followed by retail trade (30.8%) and administrative services (28.7%).
- Air transport and railway transport were among the few sectors recording declines.
Coverage and Exclusions
- The ISP covers 19 sub-sectors, including wholesale and retail trade, transport, telecommunications, real estate, and more.
- It excludes services dominated by government activities or the informal sector, such as public administration and defense.
Compilation and Inflation Adjustment
- MoSPI utilizes administrative, GST, and ASISSE data for compiling the ISP.
- Sector-specific price indices adjust GST data to estimate real output.
Experimental Nature of the ISP
- The ISP is currently published as a trial series to assess data quality and refine methodology.
- Indices for certain sectors will undergo annual revisions based on provisional monthly data.
Comparison with IIP
- The ISP and IIP together provide monthly indicators for industry and services.
- IIP tracks production in mining, manufacturing, and electricity, while ISP covers 19 services sub-sectors.
Significance of the ISP
- The ISP introduces a new monthly measure of services production, expanding India's macroeconomic indicators.
- The trial series currently covers about 60% of the formal services sector.
- The index is published monthly on an experimental basis to continue evaluating its methodology and data quality.
