The services sector dominates India's GVA but has lacked a high-frequency output indicator. Discuss the significance and limitations of the newly introduced Index of Services Production.

Services make up the largest share of India's GVA. Industry has had the monthly IIP, but services were tracked only through quarterly GVA estimates. MoSPI's trial Index of Services Production (ISP), with base year 2024–25, fills this gap. It is a real advance, but it does not yet cover the whole sector.

Significance

• High-frequency gauge: It is released on the 29th of every month and covers 19 sub-sectors, about 60% of services [3].
• Sector-level detail: In August 2026, Retail Trade grew 19.9% while Air Transport shrank 9.6% [1]. The July figures pointed the same way [2]. Weakness in one segment that a single overall number would hide can now be seen and acted on.
• Use of administrative data: It uses GST outward supplies, mapped to NIC codes and deflated, as a stand-in for output. It is a Laspeyres index weighted by GVA, the same design as the IIP [4].
• Fits the statistical reset: The base year was chosen to match the new CPI (2024), which supplies the deflators. The method was set by a Technical Advisory Committee chaired by Debjani Ghosh [5].
• Transparency: Releasing it first as a trial series on eSankhyiki invites feedback before the final series [1].

Limitations

• Formal-sector bias: Firms below the GST threshold, like small kirana shops and street vendors, are left out [4][6]. Growth may also partly reflect more firms filing returns rather than higher output.
• Coverage gaps: Health and education are excluded until ASISSE results come out [3]. ASISSE also samples only GSTN-registered firms [6].
• Weak deflators: Banking and insurance are deflated by the general CPI [4], although the approach paper prefers PPIs [6]. Service PPIs for seven services, including banking, insurance, railways and air travel, now exist but come out only quarterly [7].
• Provisional data: Railway, banking and insurance figures are revised every year [1]. There is no aggregate ISP yet [3].

Way forward

• Use Service PPIs as deflators, find ways to measure informal services, and release the aggregate index only after the sub-sector series prove stable.

The ISP ends a long blind spot in measuring India's largest sector. Better deflators and wider coverage would make it a reliable basis for policy and for RBI nowcasting. That would also support SDG 17.18 on high-quality, timely data.