India's services sector accounts for over half its GVA but has historically lacked a high-frequency output indicator. Examine how ISP addresses this gap and the challenges in capturing the informal services economy.

Q. India's services sector accounts for over half its GVA but has historically lacked a high-frequency output indicator. Examine how ISP addresses this gap and the challenges in capturing the informal services economy. (15 marks, 250 words)

Services have contributed over 50% of India's GVA since 2013-14, yet the sector lacked a monthly output gauge comparable to the Index of Industrial Production (IIP) for industry [2]. MoSPI's first Index of Services Production (ISP), released on 14 July 2026 with base year 2024-25, fills this long-standing statistical gap [1].

How ISP addresses the gap - High-frequency tracking: monthly release (29th of each month, ~60-day lag) enables real-time reading of services output, complementing IIP and GDP estimates [2]. - Robust methodology: a fixed-weight Laspeyres volume index with GVA-based weights; base year aligned with the new CPI (2024) for deflator consistency [2]. - Multi-source architecture: administrative data (air/rail, banking, insurance), GST outward-supply data (trade, telecom, real estate), and survey data (health, education) [2]. - Wide coverage: 19 sub-sectors (~60%) of formal services, with a phased path to an eventual overall ISP [1]. - Sharper policy calibration for monetary and fiscal decisions given services' dominance [2].

Challenges in capturing the informal economy - Formal-only scope: informal services—a large share of services employment—are excluded, limiting representativeness [2]. - Data-source bias: reliance on GST and administrative records inherently misses unregistered enterprises [2]. - Government health/education and gambling also remain outside coverage [2].

ISP marks a decisive step in modernising India's statistical architecture. Extending coverage to informal services, in line with NITI Aayog's data-strengthening agenda, would make it a truly holistic barometer of the services economy.

(~250 words)

Sources: 1. First Release of Sub-Sectoral Trial Index of Services Production (ISP), Base Year 2024-25 — PIB (14 July 2026) — launch date, base year, 19 sub-sectors (~60%), phased overall ISP 2. FAQs on Index of Services Production – Trial Indices, Base Year 2024-25 — PIB — services >50% GVA, Laspeyres methodology, data sources, release schedule, formal-only exclusions