- Why in news
- On 27 April 2026, MoSPI released an Approach Paper on compiling an Index of Service Production (ISP) for the formal sector and invited stakeholder comments by 5 May 2026.
- What it is
- The Index of Service Production (ISP) is a proposed short-term indicator of how services output moves, like the Index of Industrial Production does for industry. India has no such index at present. The proposal is to build it for the formal sector, mainly from aggregated GST data.
- Gap it fills
- India has an IIP for industry but no ISP to capture short-term movements in services.
- Data source
- NSO proposes to use aggregated GST data. It does not need unit-level data, so confidentiality is kept.
- Coverage
- The paper examines more than 40 services sub-sectors for output data and coverage, and also looks at price deflators.
- GST start
- GST was implemented on 1 July 2017.
- Compiler
- The National Statistics Office (NSO) under MoSPI compiles the IIP, and would compile the ISP.
Don’t confuse with ISP vs IIP: IIP tracks output of industry (mining, manufacturing, electricity). ISP is a proposed index for services output.
Don’t confuse with ISP vs GST collections: GST collections are tax revenue figures. ISP would use aggregated GST data on output and supplies, deflated by prices, to measure real activity.
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
- Gives a timely, high-frequency read on services, which are over half of GDP.
- Can improve GDP estimation and policy decisions that now rely on lagged data.
Problems
- Covers only the formal sector, leaving out the large informal services segment.
- GST data needs careful checking for statistical suitability, and suitable price deflators are needed for real output.
Way forward
- Finalise the methodology after stakeholder comments and test it against existing data.
- Extend coverage to the informal sector over time using surveys and other administrative data.
Put in your answer
Services share of GDP: Services contribute more than half of India's GDP and generate millions of jobs, yet have no short-term output index.
GST as data source: GSTN data has become a source for production and outward supplies across sectors, an example of using administrative data for statistics.
- 2014Mains GS3 · Q1Reasons services grew faster than industry; need for industrial base
- 2021Mains GS3 · Q1Difference in India's GDP computation methodology before and after 2015
- 2017Mains GS3 · Q12Why industrial growth lagged GDP post-reform; industrial policy's potential impact
- 2012Prelims Q39Which listed items belong to the Eight Core Industries group
- 2015Prelims Q8Highest-weighted industry in the Index of Eight Core Industries
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: New index proposed, an economy term on the syllabus. Only an approach paper so far, with few facts to test.
Worth revising until Prelims 2027: most news questions come within two years of the event.