Index of Services Production (ISP) (Indian Economy)
Index of Services Production (ISP) (Indian Economy)
Why is the ISP Needed?
Until now, India had the Index of Industrial Production (IIP) to track monthly industrial output, but no equivalent monthly indicator existed for services, despite services contributing over 55% of India's Gross Value Added (GVA).
What Does the ISP Measure?
The ISP is compiled by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
It is a short-term indicator designed to measure changes over time in the volume of output produced by the services sector relative to a specified base period. It measures changes in the real output of service-producing industries over time.
It tracks output across services sub-sectors such as trade, hotels and restaurants, transport, storage, communication, financial services, real estate, and other business services, using proxy indicators like GST returns, corporate data, and sector-specific administrative data.
Excluded sectors: Services like education and health are not included, as they largely fall outside the GST framework and lack high-frequency data for accurate measurement.
The ISP is calculated using a fixed-weight Laspeyres volume index, with 2024–25 as the base year, in line with the updated CPI series.
It assigns weights based on Gross Value Added (GVA) to show the relative importance of different service sectors.
It measures the real growth in service output by converting nominal turnover data into constant prices, using deflators such as the Consumer Price Index (CPI) and Wholesale Price Index (WPI).
Key Facts for Prelims
The IIP is published monthly by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
It acts as a key indicator of the industrial sector’s performance.
It is a macroeconomic indicator that captures short-term changes in the volume of industrial production in an economy over a given period.