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News: The Ministry of Statistics and Programme Implementation has proposed creating an Index of Services Production (ISP) for the formal sector using GST data, with 2024–25 as the base year.
About Index of Services Production (ISP)
- The Index of Services Production (ISP) aims to monitor the progress of the services sector.
- Proposed by: It is proposed by the Ministry of Statistics and Programme Implementation (MoSPI).
- The proposed approach has been developed in reference to international best practices and in consultation with members of the Technical Advisory Committee on ISP (TAC-ISP).
- It will complement the existing index of industrial production by offering high-frequency insights into the services economy.
- Base year: The index will adopt 2024–25 as its base year and will largely depend on data from the GST Network as a primary input.
- Coverage: It will track key service segments such as trade, transport, banking, insurance, hospitality, real estate, and professional services.
- It also examines data availability, coverage, and appropriate price deflators in line with international best practices.
- It proposes to exclude services provided by the informal sector due to the paucity of data from the data sources under consideration.
- It also proposes a temporary exclusion of the health and education sector, which accounts for 10% of the services GVA, till results of the annual survey of incorporated service sector enterprises (ASISSE) become available.
- Why is it needed: At present, India releases two major high-frequency (monthly) economic indicators:
- The Index of Industrial Production (IIP), which tracks monthly output in the industrial sector, including manufacturing, mining, and electricity.
- The Consumer Price Index (CPI), which measures retail inflation and serves as the basis for the country’s headline inflation rate.
- But, there is no Index of Service Production (ISP) to capture short-term movements in the services sector, and the unavailability of ISP created a critical data gap in assessing overall economic performance.
