What is ISP?
Index of Services Production (ISP) is a monthly high-frequency indicator that measures changes in the real output (volume) of the formal services sector relative to a base year.
It is the services sector counterpart of the Index of Industrial Production (IIP).
Key Highlights
Nodal Ministry: Ministry of Statistics and Programme Implementation (MoSPI).
Base Year: 2024-25.
First Trial Release: 14 July 2026 (for 2025-26 and April 2026).
Release Frequency: Monthly, with a 60-day time lag.
Compiled using a fixed weight Laspeyres Volume Index.
Weights are based on Gross Value Added (GVA) of service sectors.
Objectives
Complement the Index of Industrial Production (IIP).
Provide high-frequency data on the services sector.
Improve economic forecasting and business cycle analysis.
Strengthen evidence-based policymaking.
Coverage
Included Sectors: Wholesale and retail trade, Transport, Banking and insurance, Telecommunications, Hotels and restaurants, Real estate, Professional, scientific and technical services, Arts, entertainment and recreation
To be Included Later: Health services and Education services (after availability of ASISSE data).
Data Sources
Administrative data: Air Transport, Railways, Banking and Insurance.
GST (GSTR-1 outward supplies): Most service industries.
Annual Survey of Incorporated Services Sector Enterprises (ASISSE): Health and Education.
Why is ISP Important?
Services contribute over 50% of India’s Gross Value Added (GVA) since 2013-14.
Provides timely tracking of service sector performance.
Enables faster policy response and economic monitoring.
Aligns India with international statistical practices.
Limitations
Covers only the formal services sector.
Excludes: Public administration and defence, Government health and education, Social work without accommodation, Household services, Activities of extraterritorial organisations, Gambling and betting, Other predominantly non-market and informal services.
What is the proposed compilation formula?
ISP is proposed to be compiled using a fixed-weight Laspeyres Volume Index
Measures changes in output using fixed base year weights.
Widely used for indices such as IIP due to the ease of comparison over time.
Challenges
Limited coverage due to the exclusion of the informal services sector, which remains significant in India.
Dependence on administrative and GST data may affect timeliness and completeness.
A time lag of 60 days may reduce the usefulness for immediate policy responses.
Delayed inclusion of health and education services may initially limit comprehensiveness.
Way Forward
Gradually expand coverage to include more service activities as reliable data becomes available.
Improve real-time administrative data collection and integration.
Strengthen statistical capacity for measuring informal service activities.
Periodically revise the base year and sectoral weights to reflect structural changes in the economy.
Enhance coordination among MoSPI, GSTN, RBI, and sectoral regulators for robust data quality.
Conclusion
The Index of Services Production (ISP) is a landmark achievement for the Indian statistical system since it will be used to measure the production level of the services sector on a monthly basis. This is because the services sector accounts for over half of the economy of India, thus making it essential for the government.