India Launches Index of Services Production: A Milestone in Economic Statistics

The Ministry of Statistics and Programme Implementation (MoSPI) has officially launched the Index of Services Production (ISP), India’s first high-frequency monthly indicator dedicated to measuring the performance of the services sector. This development represents a significant advancement in the country’s statistical architecture, addressing a long-standing gap in tracking the dominant segment of the Indian economy.

India's services sector gets its own monthly growth tracker. | Firstpost

The Need for a Dedicated Services Index

The services sector has consistently contributed more than half of India’s Gross Value Added (GVA), serving as the primary driver of economic growth, investment, and exports in recent years. Despite its critical importance, policymakers and analysts previously relied on quarterly GDP estimates and indirect indicators for insights into services activity. The new ISP functions as the services counterpart to the well-established Index of Industrial Production (IIP), offering timely data on real output volumes across key service industries.

By providing a regular pulse on short-term trends, the ISP is expected to strengthen economic monitoring, improve forecasting accuracy, and support more informed policy decisions.

Key Features and Methodology

The ISP uses 2024-25 as its base year, chosen for its alignment with the revised Consumer Price Index series. It is compiled as a Laspeyres volume index with weights based on sectoral shares in GVA from the National Accounts Statistics. This approach ensures that larger segments of the economy receive appropriate emphasis in the overall index.

Data compilation draws on a sophisticated combination of sources, primarily Goods and Services Tax (GST) returns for many market-oriented services, supplemented by administrative records from regulators and ministries for sectors such as banking, insurance, railways, and aviation. The index initially focuses on the formal services sector, covering areas including wholesale and retail trade, transport, telecommunications, hospitality, real estate, professional services, and arts and entertainment. Certain segments like health and education services provided by private entities will be integrated in subsequent phases once additional survey data becomes available.

Nine specific categories, largely related to government functions or informal activities, remain outside the initial scope to maintain methodological consistency and data reliability.

Strong Performance in Inaugural Data

The trial release covering April 2026 delivered encouraging results. Fourteen out of the 19 sub-sectors recorded double-digit growth, highlighting broad-based momentum in the services economy. Leading the expansion were accommodation and food services at 37.2 percent, followed by retail trade at 30.8 percent, administrative and support services at 28.7 percent, and real estate activities at 27.7 percent.

These figures underscore the resilience and dynamism of key service industries in the early part of the financial year.

Release Schedule and Future Outlook

Following the inaugural release on July 14, 2026, regular monthly indices will be published around the 29th of each month, with an approximate 60-day lag. The initial phase involves trial dissemination of both the aggregate index and sub-sectoral breakdowns to allow for stakeholder feedback and methodological refinements.

Experts anticipate that the ISP will evolve over time, incorporating more comprehensive data sources and potentially expanding coverage as statistical capabilities improve. This progressive approach positions India alongside several advanced economies that already maintain similar services production indices.

The MGMM Outlook 

India’s launch of the Index of Services Production (ISP) marks a significant step in strengthening the country's economic data framework by bringing greater visibility to the sector that contributes the largest share of national output. With monthly tracking of services activity, policymakers, businesses, and investors will have access to more timely and reliable information, enabling quicker responses to changing economic conditions. The strong inaugural data also reflects the continued momentum across industries such as hospitality, retail, real estate, and professional services, highlighting the resilience of India's expanding services economy.

The introduction of the ISP reinforces India's commitment to building a modern, data-driven economy supported by transparent and internationally aligned statistical practices. As the index expands to include additional sectors over time, it is expected to improve economic planning, strengthen investor confidence, and provide a clearer picture of India's growth story. This initiative complements the country's broader push toward evidence-based policymaking and positions India to better monitor and sustain long-term economic development.

(Sources: Business Standard, Firstpost, LiveMint)