Context: Index of Service Production
- Government plans to introduce a monthly Index of Service Production to improve tracking of the services sector.
Key Points
- Services sector contributes 50%+ of Gross Domestic Product (GDP) but lacks monthly measurement.
- Existing system:
- Quarterly Gross Value Added (GVA)
- Annual surveys
- Leads to time lag and no real-time trends
- Ministry of Statistics and Programme Implementation to introduce Index of Service Production (ISP) monthly.
Purpose
- Track monthly output of services sector
- Improve real-time policymaking
Data sources
- Goods and Services Tax (GST) data
- Administrative data + surveys
Key technical issue
- Need to measure real growth (remove inflation)
- Ideal: Producer Price Index (PPI)
- Problem: No PPI for services in India
Current approach
- Use Consumer Price Index (CPI) as proxy
- Limitation: CPI reflects consumer prices, not producer-level prices
- Leads to less precise output measurement
Coverage gaps
- Informal sector excluded
- Health and education excluded initially
Overall
- Shift from delayed → monthly tracking
- Better frequency, but accuracy depends on data and price index availability
