- Why in news
- On 6 October 2026, MoSPI published an approach paper to widen the Index of Services Production (ISP) and invited stakeholder comments by 16 October 2026.
- What it is
- The Index of Services Production is a monthly index that tracks short-term movements in India's services sector, much as the Index of Industrial Production does for industry. It is compiled by MoSPI using administrative data and GST outward supply data. It currently covers only the formal sector.
- Base year and start
- The monthly ISP for the formal sector uses 2024-25 as base year. It began on a trial basis in July 2026.
- Current coverage
- The index tracks 19 broad service sub-sectors, covering about 60 per cent of services GVA. It uses administrative data and GST outward supplies data.
- Exclusions
- Core government tasks, non-market activities and GST-exempt services are left out of the present framework.
- Expanded coverage
- With these sectors, ISP coverage would rise to about 78.4 per cent of services GVA.
- Nodal ministry
- MoSPI is the ministry that compiles national statistics such as GDP, IIP and CPI.
- First of its kind
- ISP is India's first high-frequency indicator dedicated to services output. It tracks volume changes in the formal services sector against a base year.
- First release
- The trial ISP covers 19 sub-sectors for April 2026, about 60% of the services sector.
- Base year
- The base year is 2024-25, aligned with the new 2024-based CPI series.
- Deflators
- WPI is used for wholesale trade. CPI or the closest matching CPI is used for most other sectors. CPI-Services is the fallback where no specific CPI exists.
- Data sources
- Three sources are used: administrative data, GST data and ASISSE. GST data is used for the first time in statistical applications.
- Framework
- MoSPI formed a Technical Advisory Committee in May 2025 to design the ISP framework.
- Committee
- The TAC-ISP was set up in May 2025 under Debjani Ghosh of NITI Aayog.
- Method
- The report recommends a Laspeyres volume index, base year 2024-25, at 2-digit NIC 2025 level, with GVA weights.
- Release timing
- The ISP is to be released within 60 days of the reference month.
- Weight of services
- Services contribute nearly 53 percent of India's GVA.
Don’t confuse with ISP vs IIP: IIP tracks industrial output (mining, manufacturing, electricity). ISP tracks services output. Both are compiled by MoSPI.
Don’t confuse with ISP vs GVA: GVA is the value added by a sector in the national accounts. ISP is a monthly volume index of short-term movement.
Don’t confuse with Nominal vs real: Nominal values include price effects. Real (volume) values remove them through a deflator.
Don’t confuse with Laspeyres vs Paasche index: A Laspeyres index uses fixed base-period weights. A Paasche index uses current-period weights.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- A monthly services index gives timely signals on the sector that drives over half of GVA.
- Wider coverage can improve quarterly GDP estimates and policy decisions.
- Gives timely monthly data on the sector that contributes over 50% of GVA.
- Can improve national accounts estimates and policy responses.
- Gives a monthly high-frequency gauge for over half of the economy, which was earlier tracked mainly through quarterly GDP.
- Uses existing GST data, so no extra reporting burden on firms.
Problems
- Output of education, health and public administration is hard to measure because it is largely non-market.
- Informal services remain outside the formal-sector index.
- The index covers only the formal sector and excludes several sub-sectors, so it is incomplete.
- Different deflators are used and CPI-based deflation may not match services prices well.
- Covers only the formal sector, so informal services, a large part of employment, are left out.
- GST-exempt services such as health, education and railways need other data sources, which can limit consistency.
Way forward
- Refine methods after stakeholder comments and test them on the trial series.
- Add informal-sector data sources over time.
- Widen coverage to more sub-sectors and the informal sector as ASISSE and other data become available.
- Move from the trial index to a regular index with better deflators.
- Use the trial releases to take stakeholder feedback and validate the index against quarterly and annual data.
- Extend coverage to the informal sector over time.
Put in your answer
Services share: Services drive more than half of India's GVA.
Coverage gap: Three excluded sectors make up nearly 21 per cent of services GVA.
Global target: The Government targets a 10% share in global services by 2047.
- 2014Mains GS3 · Q1Why did India's services grow far faster than industry, skipping industrialisation, and can it develop without industry?
- 2021Mains GS3 · Q1How GDP computation methodology differs before and after the 2015 revision.
- 2019Mains GS3 · Q1Indirect taxes subsumed in GST and its revenue implications since 2017.
- 2017Mains GS3 · Q12Why industrial growth lagged overall GDP growth post-reform, and whether recent industrial policy can help.
- 2012Prelims Q39Which items are among the Eight Core Industries in the Index of Industrial Production?
- 2015Prelims Q8Which Eight Core Industry is given the highest weight in the index?
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Single answer
Ours, not from a UPSC paper
Consider the following statements about the Index of Services Production (ISP) compiled in India: 1. The monthly ISP for the formal sector uses 2024-25 as its base year. 2. The present framework relies on administrative data and GST outward supplies data. 3. GST-exempt services are included in the present framework. 4. The present framework covers about 78 per cent of services-sector GVA.
Which of the statements given above are correct?
True or false?
1 of 11
Statements the way Prelims prints them. Say first, then see the fact.
1.The Index of Services Production is compiled monthly by the Ministry of Statistics and Programme Implementation.
True. MoSPI compiles the monthly ISP.
2.The present ISP framework uses data of outward supplies under GST among its sources.
True. It relies on administrative data and GST outward supplies data.
3.GST-exempt services are excluded from the present ISP framework.
True. Core government tasks, non-market activities and GST-exempt services are excluded.
4.The approach paper proposes to add Education, Human Health & Residential Care, and Trade & Hotels to the ISP.
False. The third sector is Public Administration & Defence.
5.The Index of Services Production is a measure of short-term movements in services output, similar in purpose to the Index of Industrial Production for industry.
True. Both are high-frequency volume indices of sectoral output.
6.The Index of Services Production is compiled by the Ministry of Statistics and Programme Implementation.
True. MoSPI constituted the TAC and releases the ISP.
7.The ISP measures short-term changes in the volume of output of the formal services sector.
True. It tracks volume changes in formal services output relative to a base year.
8.Goods and Services Tax data is used in the ISP compilation for the first time in statistical applications in India.
True. The release says GST data is used for the first time in statistical applications.
9.The Wholesale Price Index is used as the deflator for all services sub-sectors in the ISP.
False. WPI is used only for wholesale trade; most others use CPI or the closest CPI.
10.A price deflator converts nominal (value-based) data into real (volume-based) data.
True. Deflating removes the effect of price changes from nominal revenue.
11.Public administration and defence services are included in the ISP's initial coverage.
False. Public administration and defence are excluded, being core government activities.
Written by us from the release, not by UPSC; checked by a second model.
Worth revising until Prelims 2028: most news questions come within two years of the event.