India’s Services Sector Gains New Insights with ISP Initiative
The Ministry of Statistics and Programme Implementation (MoSPI) has taken a significant step towards enhancing the measurement of India’s vibrant services sector by initiating the compilation of the Index of Services Production (ISP). This landmark initiative aims to provide a comprehensive monthly measure reflecting the short-term movements within this crucial sector, which contributes nearly 53 percent to the country’s Gross Value Added (GVA).
Recognized as a major driver of economic growth, the services sector not only creates substantial employment opportunities but also significantly influences investment and exports in India. The introduction of the ISP represents a critical advancement in strengthening the country’s statistical framework, ensuring more accurate and timely data that reflects ongoing economic activities.
Leveraging GST Data for Enhanced Accuracy
The ISP will utilize data from the Goods and Services Tax (GST), which has revolutionized the statistical landscape in India. With millions of businesses filing monthly GST returns, the information gathered offers a rich tapestry of economic activity, particularly in market-based services. By aligning GST data with appropriate price deflators, MoSPI aims to provide an accurate estimation of real changes in service sector output on a monthly basis. Notably, this method alleviates any extra reporting burdens on businesses, as the necessary data is already being collected for tax purposes.
While the GST data encompasses a wide range of market-based services—including trade, accommodation, and professional services—some sectors such as health and education, along with specific transportation services, remain exempt from GST. To address this gap, the ISP will also incorporate data from administrative sources like railways, aviation, banking, and insurance, making it a uniquely comprehensive blend of various methodologies tailored to India’s diverse economic landscape.
Guidance from the Technical Advisory Committee
To facilitate the effective development of ISP, MoSPI established the Technical Advisory Committee on Index of Services Production (TAC-ISP) in May 2025, under the leadership of Ms. Debjani Ghosh, a distinguished fellow from NITI Aayog. The committee, which includes representatives from academia, industry associations, and relevant governmental departments, has engaged in thorough discussions regarding the conceptual and operational elements of the ISP.
Recently, the Committee finalized its report after extensive deliberations, presenting a detailed framework for the monthly compilation of the ISP. This report outlines various significant aspects such as sectoral coverage, relevant data sources, index methodology, and a comprehensive dissemination framework aimed at promoting stakeholder engagement and validation of the proposed methodology.
Looking Ahead: Testing the ISP
The TAC recommends launching the overall and sub-sectoral ISPs initially on a trial basis, allowing for feedback from users and the chance to evaluate the resilience of the indices. To meet strict timelines, the recommendation includes compiling and releasing monthly sectoral indices within 60 days of the reference month. This plan ensures a robust and internationally comparable framework is in place for anticipating trends in India’s services economy.
This proactive approach not only aims to enhance data quality but also ensures that stakeholders fully understand the ISP framework ahead of its trial release, slated for July 14, 2026. The move is expected to play a pivotal role in improving decision-making and policy formulation in a crucial sector of the Indian economy.
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