Media365
India is set to take a major step towards improving its economic data framework with the launch of the country’s first Index of Services Production (ISP) on July 14, introducing a monthly indicator to track output across the services sector—the largest contributor to the Indian economy.
The new index, developed by the Ministry of Statistics and Programme Implementation (MoSPI), is designed to provide a high-frequency assessment of the services economy, much like the Index of Industrial Production (IIP) does for manufacturing. With services contributing around 55 per cent of India’s Gross Value Added (GVA), the index is expected to fill a longstanding gap in India’s macroeconomic data ecosystem.
Why does India need a services output index?
Until now, policymakers, businesses and investors have largely relied on quarterly GDP estimates and fragmented indicators to assess the health of the services sector. Unlike manufacturing, which has long been tracked through the monthly IIP, the services economy lacked a dedicated high-frequency indicator despite accounting for more than half of India’s economic output.
The ISP seeks to bridge this gap by providing a monthly snapshot of changes in services production, allowing governments and markets to identify shifts in economic activity much earlier than quarterly national accounts.
How will the index work?
The first release, covering April 2026, will be published on July 14 with a 60-day time lag. Going forward, the index will be released every month on the 29th, or the next working day if the date falls on a holiday. The base year for the index is 2024-25.
MoSPI has said the index will initially be published as an experimental series, allowing it to assess the stability and robustness of the methodology before transitioning to regular compilation.
What sectors will it cover?
The ISP will capture activity across major service industries, including wholesale and retail trade, transport, banking, insurance, telecommunications, hotels and restaurants, real estate, professional and technical services, administrative support services, and arts, entertainment and recreation. Health and education services are expected to be added in subsequent phases once additional enterprise survey data becomes available.
According to the proposed framework, IT services will account for more than one-fifth of the index’s weight, highlighting the sector’s growing importance in India’s services-led economy. Retail trade, banking and administrative support services will also carry significant weights.
Powered by GST data
A key feature of the ISP is its reliance on GST return data, administrative records and the Annual Survey of Incorporated Services Sector Enterprises (ASISSE). By leveraging tax data, the government aims to generate a more timely and comprehensive measure of formal sector activity.
Since GST information is being used for statistical purposes for the first time, MoSPI will initially release trial estimates before adopting the index as a regular macroeconomic indicator. Revenue data will also be adjusted using price deflators to remove the impact of inflation and measure real output growth.
Why it matters
The introduction of the ISP is expected to improve the quality of economic policymaking by giving authorities a clearer and more frequent picture of India’s services economy. Faster availability of data could help policymakers respond more quickly to changes in demand, consumption and business activity while offering investors an additional indicator to gauge the strength of economic growth.
The launch also brings India in line with economies such as Japan, South Korea, China and the European Union, all of which publish dedicated services output indicators alongside manufacturing data.
As India’s economy becomes increasingly services-driven, the monthly Index of Services Production is expected to become one of the country’s most closely watched macroeconomic indicators, complementing GDP, IIP and other high-frequency data in assessing the pace and direction of economic activity.
