Index of Services Production (ISP): Features & Significance

Context:

Recently, the Government of India has released the first sub-sectoral trial Index of Services Production (ISP) for April 2026, covering 19 service sub-sectors that represent nearly 60% of India’s services sector. ISP is India’s first high-frequency macroeconomic indicator dedicated to measuring the performance of the services sector.

What is the Index of Services Production (ISP)?

• • • The Index of Services Production (ISP) measures short-term changes in the volume of output produced by the formal services sector compared to a selected base year.
    • It has been developed by the Ministry of Statistics and Programme Implementation (MoSPI) to address the gap in economic measurement, as the existing Index of Industrial Production (IIP) covers only industrial activities.

Objectives of ISP:

• • • Provide timely information about the performance of the services sector.
    • Improve national accounts and Gross Domestic Product (GDP) estimates.
    • Support evidence-based economic policymaking.

Key Features of ISP:

• • • The Index of Services Production (ISP) has a base year of 2024–25 and has been designed as a monthly high-frequency indicator to track short-term changes in services sector output.
    • The index will be released around 60 days after the reference month.
    • The first trial ISP covered 19 sub-sectors, representing nearly 60% of India’s services sector. In April 2026, compared to April 2025, 14 sub-sectors recorded double-digit annual growth.
    • The major growth-performing sectors in April 2026 were:
      • Accommodation and Food Services (37.2%)
      • Retail Trade (30.8%)
      • Administrative and Support Services (28.7%)
      • Real Estate (27.7%)
      • Telecommunications (22.8%)
    • These trends indicate strong momentum in consumer services, business support activities, and digital connectivity sectors.

Significance of ISP:

• • • Better Understanding of the Services Sector: The services sector contributes around 52.9% of India’s Gross Value Added (GVA) in 2024–25 and plays a major role in employment generation and economic growth. ISP will provide regular insights into the performance of the sector.
    • Improved Economic Policy: Timely data will help policymakers design effective sector-specific measures and improve economic forecasting.
    • Modernising the Statistical Framework: ISP represents a shift towards the use of digital databases, GST information, and administrative data for economic assessment.

Conclusion:

The Index of Services Production (ISP) is an important milestone in India’s economic data system. As the services sector becomes the largest contributor to economic growth, a dedicated high-frequency indicator will improve economic monitoring, strengthen policymaking, and provide a clearer picture of India’s growth trajectory.