Index of Services Production (ISP)

#Economy #Infrastructure #Growth #GS-3

Why in News

The Ministry of Statistics and Programme Implementation (MoSPI) is planning to launch the Index of Services Production (ISP) in July 2026.
This new tool will help the government track short-term changes in the vital services sector.

The Index of Services Production (ISP) is a key economic indicator that measures monthly changes in the real output of the services sector.
It acts as a direct service sector equivalent to the Index of Industrial Production (IIP) used for industries.
The Ministry of Statistics and Programme Implementation (MoSPI) is the nodal agency responsible for compiling and releasing this index.
It captures fast-moving economic trends to complement the existing Index of Industrial Production (IIP) data.
It gives policymakers timely data to make smart decisions, forecast economic trends, and study business cycles.
It helps monitor a massive sector that has contributed over 50% of India's Gross Value Added since 2013-14.

The government gathers output data from three main sources to build this index.
It uses GST data from GSTR-1 forms to track real-time business turnover using Service Accounting Code (SAC) numbers.
It collects administrative records for transport sectors like air and railways, alongside banking and insurance performance reports.
It gathers survey data from the Annual Survey of Incorporated Services Sector Enterprises (ASISSE) for private health and education services.
The government converts nominal financial turnover into real volume numbers by using specific price deflators.
It uses the Wholesale Price Index (WPI) for wholesale trade, and the Consumer Price Index for banking and insurance.
It assigns sector weights based on each industry's actual share in the Gross Value Added (GVA) from national accounts.
The final index uses a fixed-weight Laspeyres volume index mathematical formula to calculate results.

The index uses 2024-25 as its official base year to match modern economic conditions and recent consumer price series.
It mainly covers formal corporate businesses because its core data comes from units registered under the GST network.
It leaves out government services, defence, personal services, gambling, and central bank activities.
Private health and education sub-sectors will join the index later once full ASISSE survey reports are ready.
The government will release the index every month with a delay of about 60 days, usually on the 29th of each month.