FAQs on Index of Services Production – Trial Indices with Base Year 2024-25
Key Points
The Ministry of Statistics and Programme Implementation (MoSPI) is launching the Index of Services Production to enhance economic monitoring in India's burgeoning services sector. This initiative is crucial for UPSC aspirants, particularly for GS Paper 3, as it relates to economic development. Last Updated: 26-06-2026
Key Facts About the Index of Services Production (ISP)
- The Index of Services Production (ISP) is a monthly macroeconomic indicator developed by MoSPI to measure changes in the real output of India's formal services sector.
- Since 2013-14, services have contributed over 50% of India’s Gross Value Added (GVA), yet no monthly indicator existed to track real growth.
- The ISP aims to provide timely information on services industries' performance, enhancing economic monitoring and policy decisions.
- It complements the Index of Industrial Production (IIP) to track overall economic activity and improve forecasting.
- Advancements in data availability, such as high-frequency GST data and the Annual Survey of Incorporated Services Sector Enterprises (ASISSE), support the ISP's compilation.
- The ISP is limited to the formal sector, excluding non-market government activities, personal services, and the informal sector.
- Compiled using a fixed-weight Laspeyres volume index with 2024–25 as the base year, it employs GVA-based weights for economic significance.
- MoSPI will introduce trial indices for 2025–26 and April 2026 starting in July 2026.
India's Economic Monitoring Enhancement
The introduction of the ISP is a pivotal development in India's economic monitoring landscape. It aligns with India's strategic goal of improving economic data accuracy and timeliness, crucial for policy-making and economic planning. With services contributing significantly to India's GDP, the ISP offers a clearer picture of economic health, aiding in international comparisons and growth assessments.
UPSC Relevance
The ISP is relevant for GS Paper 3 under economic development, focusing on the service sector's contribution to GDP. For prelims, questions may arise about the ISP's definition, objectives, and data sources. In mains, discussions could explore the impact of improved economic indicators on policy-making and economic planning.
FAQ Section
What is the Index of Services Production (ISP)?
The ISP is a monthly high-frequency indicator developed by MoSPI to measure short-term changes in the real output of India's formal services sector, complementing the IIP.
Why has India introduced the ISP?
To address the absence of a monthly indicator tracking the sector's real growth, which contributes over 50% of GVA.
What are the major data sources used for compiling the ISP?
The ISP utilizes administrative data, GST outward supplies linked to Service Accounting Codes (SACs), and ASISSE data.
Why use Consumer Price Index (CPI) instead of Service Producer Price Index (SPPI)?
SPPIs are limited in scope and released quarterly. CPI serves as a practical deflator for real service output.
Detailed Coverage
- ISP measures real output changes in India's formal services sector.
- Introduced by MoSPI to track sector growth.
- Services contribute over 50% of India's GVA.
- Addresses the lack of monthly indicators for the services sector.
- Provides timely data for economic monitoring and policy decisions.
- Utilizes high-frequency GST data and ASISSE for reliability.
- Excludes non-market government activities and informal sectors.
- Compiled using a fixed-weight Laspeyres volume index.
- 2024-25 is the base year for the ISP.
- Data sources include administrative, GST, and ASISSE data.
- Air transport and railways use quantity-based indicators.
- Other services rely on value-based indicators like turnover.
- CPI Non-Food will serve as a proxy deflator.
- Trial indices planned for 2025-26 with a stable transition.
- ISP enhances economic monitoring and supports better policy decisions.
- Launch reflects MoSPI's commitment to improving service sector tracking.