UPSC Prelims Practice Questions — Release of Sub-Sectoral Trial Index of Services Production (ISP) for July 2026 (Base Year 2024–25)

Q1. With reference to the Index of Services Production (ISP) and the Index of Industrial Production (IIP) in India, consider the following statements: Which of the statements given above is/are NOT correct?

  1. The ISP measures changes in the real volume of services output relative to a base year, not changes in nominal turnover.
  2. Because the IIP includes electricity generation, it already captured a part of the tertiary sector before the ISP was introduced.
  3. The ISP is designed to measure the output of the entire services sector, including public administration and defence.
  • A. 1, 2 and 3
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1 only

Q2. With reference to the choice of price deflators for converting services turnover into real output, consider the following statements: Which of the statements given above is/are correct?

  1. A Service Producer Price Index records prices received by service providers, whereas a Consumer Price Index records prices paid by buyers and therefore includes indirect taxes such as GST.
  2. If the deflator used for a service overstates the true rise in its price, the real output growth of that service will be overstated.
  3. International practice prefers producer price indices for services as deflators, with consumer price indices used as a fallback where these are unavailable.
  • A. 1, 2 and 3
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1 and 2 only

Q3. Suppose the GST rate on a particular service is raised in a month, while the pre-tax price charged by providers and the actual quantity supplied remain unchanged. If the Index of Services Production for that sub-sector is obtained by deflating the taxable (pre-tax) value of GST outward supplies by the relevant Consumer Price Index, the index for that month is most likely to:

  • A. show a rise in real output even though actual output is unchanged
  • B. stay unchanged, as taxable values and the CPI both exclude GST
  • C. stay unchanged, as the CPI rise is offset by higher taxable values
  • D. show a fall in real output even though actual output is unchanged

Q4. In the trial Index of Services Production for July 2026 (base 2024-25 = 100), the index for Accommodation & food services stood at 144.0 and that for Air Transport at 87.8, with Air Transport showing a change of −8.4% over July 2025. Which of the following inferences can validly be drawn from these figures alone?

  1. Air Transport output in July 2026 was below its average monthly level in 2024-25.
  2. Accommodation & food services recorded the highest year-on-year growth among all sub-sectors in July 2026.
  3. Accommodation & food services output in July 2026 was about 44% higher than in July 2025.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q5. With reference to the compilation of the Index of Services Production as a fixed-weight Laspeyres volume index, consider the following statements: Which of the statements given above is/are correct?

  1. The weight of each sub-sector stays at its base-period value even if that sub-sector's share in the economy changes afterwards.
  2. Where industries within a sub-sector are weighted by GST turnover rather than value added, high-turnover, low-margin activities such as trade receive more weight than their value-added share would justify.
  3. A sub-sector whose index falls below 100 in a month necessarily pulls the combined index below 100 as well.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1 and 2 only

Q6. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The trial Index of Services Production does not measure the output of the health and education sub-sectors through GST data.
  2. Most health-care and educational services are exempt from GST, so GST returns do not provide a reliable record of their output.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q7. Consider the following assertion: Before the Index of Services Production was introduced, India's monthly Index of Industrial Production gave only a partial picture of short-term economic activity. Which of the statements given below support/supports the above assertion?

  1. The services sector contributes more than half of India's Gross Value Added.
  2. The Index of Industrial Production covers mining, manufacturing, electricity and other utilities, but not activities such as trade, transport and finance.
  3. The Index of Industrial Production, like the ISP, is a fixed-base index whose values are expressed relative to 100 in its base year.
  • A. 2 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 1 and 3 only

Q8. The trial Index of Services Production shows that Retail Trade grew by 18.5% in July 2026 over July 2025. The index for this sub-sector is compiled from GST outward supplies deflated by a consumer price index. Which of the following inferences can validly be drawn?

  1. The measured growth relates to retail businesses that file GST returns.
  2. Retail sales of small kirana stores below the GST registration threshold also grew by about 18.5%.
  3. Any error in the price index used to deflate retail sales would be carried into the measured real growth rate.
  4. Retail Trade grew faster than every other services sub-sector in July 2026.
  • A. 1 and 3 only
  • B. 2 and 4 only
  • C. 1 and 2 only
  • D. 1, 3 and 4 only