{"id":100565,"date":"2026-04-28T11:50:41","date_gmt":"2026-04-28T06:20:41","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=100565"},"modified":"2026-04-28T11:50:41","modified_gmt":"2026-04-28T06:20:41","slug":"index-of-service-production","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/index-of-service-production\/","title":{"rendered":"Index of Service Production: Why Index of Service Production Matters for India\u2019s Economy"},"content":{"rendered":"<h2><b>Index of Service Production Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Ministry of Statistics and Programme Implementation (MoSPI) has released an &#8216;Approach Paper&#8217; outlining its plan to measure the <\/span><b>output<\/b><span style=\"font-weight: 400;\"> of India&#8217;s <\/span><b>formal services sector<\/b><span style=\"font-weight: 400;\"> every month through a new Index of Service Production (ISP).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The index will use <\/span><b>2024-25 as the base year<\/b><span style=\"font-weight: 400;\"> and will rely heavily on GST Network data as a key input. Public comments on this proposal have been invited.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A Technical Advisory Committee on ISP (TAC-ISP) was formed in May 2025. It consisted of 24 experts. It has prepared the current approach paper after extensive discussions.<\/span><\/li>\n<\/ul>\n<h2><b>What is the ISP and Why is it Needed<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currently, India publishes two key high-frequency (monthly) economic indicators:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/index-of-eight-core-industries\/\" target=\"_blank\"><b>Index of Industrial Production (IIP)<\/b><\/a><span style=\"font-weight: 400;\"> \u2014 measures monthly output of the industrial sector (manufacturing, mining, electricity).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Consumer Price Index (CPI)<\/b><span style=\"font-weight: 400;\"> \u2014 measures retail inflation and forms the basis of India&#8217;s headline inflation number.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Both are closely watched by policymakers, the RBI, and economists to understand the economy&#8217;s trajectory.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, there is <\/span><span style=\"font-weight: 400;\">no equivalent monthly index for the services sector<\/span><span style=\"font-weight: 400;\"> \u2014 a glaring gap given that services contribute more than <\/span><b>half of India&#8217;s GDP<\/b><span style=\"font-weight: 400;\"> and <\/span><b>generate millions of jobs<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h3><b>What Do Policymakers Use Currently<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To understand services sector performance, policymakers and economists currently rely on the S&amp;P Global&#8217;s HSBC <\/span><strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/purchasing-managers-index-pmi\/\" target=\"_blank\">Purchasing Managers&#8217; Index (PMI)<\/a><\/strong><span style=\"font-weight: 400;\"><strong>.<\/strong>\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, the PMI is a survey-based sentiment index \u2014 it captures how businesses feel about activity, not what is actually being produced.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It does not measure actual output. The ISP is designed to fill this gap with hard, output-based data.<\/span><\/li>\n<\/ul>\n<h2><b>Index of Service Production (ISP)<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">ISP aims to track short-term movements in the services sector. It will be similar in concept to IIP but for services.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It will be developed by the National Statistical Office (NSO).<\/span><\/li>\n<\/ul>\n<h3><b>What Will the ISP Cover<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The approach paper studies 40+ service sub-sectors, including:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Trade (wholesale &amp; retail)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Transport\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Banking and insurance\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Communication\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Hotels and restaurants\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Real estate\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Professional and technical services\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Entertainment and recreation\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Focus is on availability of output data and price deflators.<\/span><\/li>\n<\/ul>\n<h3><b>Methodology and Global Alignment<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Based on international best practices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Includes methods for:\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Data standardisation\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Use of price deflators (to adjust for inflation)<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><b>What Data Sources Will the ISP Use<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MoSPI plans to draw from three key data sources:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>GST Network (GSTN) Data<\/b><span style=\"font-weight: 400;\"> \u2014 Provides information on production and outward supplies across different sectors and will serve as the primary data source for monitoring services sector output. However, sectors exempt from GST \u2014 such as health and education \u2014 cannot be captured through this route.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Administrative Data from Ministries and Organisations<\/b><span style=\"font-weight: 400;\"> \u2014 Sector-specific data from relevant government bodies will supplement GSTN data for sectors not covered by GST.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Annual Survey of Incorporated Services Sector Enterprises (ASISSE) <\/b><span style=\"font-weight: 400;\">\u2014 MoSPI&#8217;s own enterprise survey, currently being conducted, will provide additional granularity.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It should be note that all three data sources exclude the informal services sector.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The excluded segments \u2014 due to data unavailability \u2014 account for nearly <\/span><b>33% of total GVA of the services sector<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Specifically, health and education (which will be excluded until ASISSE results are available) alone account for nearly 10% of services sector GVA.<\/span><\/li>\n<\/ul>\n<h3><b>How Will Output be Adjusted for Prices<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To convert nominal output into real output (adjusted for price changes), a Producer Price Index (PPI) would ideally be used \u2014 as it measures the prices received by producers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, since India does not yet have a comprehensive PPI, MoSPI plans to use non-food CPI and sub-sector specific CPI as proxies in the interim.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">DPIIT is currently working on revising the Wholesale Price Index (WPI) and developing a full Producer Price Index (PPI).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">A Working Group has recommended methodologies for compiling PPIs for services sub-sectors like Banking, Insurance, Securities, Pensions, Air Transport, Railways, and Telecom.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The ISP, once operationalised, will be a transformative addition to India&#8217;s statistical architecture.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It will give policymakers \u2014 including the RBI&#8217;s Monetary Policy Committee \u2014 a far more accurate and timely picture of the services sector, which is the backbone of India&#8217;s economy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It will also reduce India&#8217;s dependence on private sector survey-based indices like the PMI for understanding services output.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The initiative reflects MoSPI&#8217;s broader push toward evidence-based policymaking through better data.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/business\/mospi-service-index-gst-data-service-sector-monthly-output-10658822\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"http:\/\/pib.gov.in\/PressReleaseDetail.aspx?PRID=2255933&amp;reg=1&amp;lang=1\" target=\"_blank\" rel=\"nofollow noopener\">PIB<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Index of Service Production will track India\u2019s services sector monthly. Index of Service Production fills a key data gap using GST and other official sources.<\/p>\n","protected":false},"author":18,"featured_media":100580,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[7174,60,22,59],"class_list":{"0":"post-100565","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-index-of-service-production","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/100565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=100565"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/100565\/revisions"}],"predecessor-version":[{"id":100595,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/100565\/revisions\/100595"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/100580"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=100565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=100565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=100565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}