India unveils trial Index of Services Production; 14 sub-sectors grow strongly
New Delhi: India on Tuesday unveiled its first trial Index of Services Production (ISP), marking a significant overhaul of the country’s economic statistics and providing
New Delhi: India on Tuesday unveiled its first trial Index of Services Production (ISP), marking a significant overhaul of the country’s economic statistics and providing policymakers a long-awaited monthly measure of activity in the services sector that accounts for more than half of its gross domestic product (GDP). The inaugural trial release, with 2024-25 as the base year, showed that 14 out of the 19 sub-sectors recorded double-digit growth in April over the same month a year ago, while nearly all the categories recorded positive growth during the month, indicating sustained momentum in formal services sector despite mixed signals from manufacturing and external trade. The 19 sub-sectors account for about 60% of the services sector. In a statement, the ministry of statistics and programme implementation (MoSPI) said that the overall ISP will be released at a later stage, after assessing the stability and resilience of sub-sectoral indices and improving the overall coverage of services. Also Read | Services PMI grows at slowest pace in 17 months in June as demand softens Top sub-sectors reporting strong growth in the April include accommodation and food (37.2%), retail trade (30.8%), administrative and support services (28.7%) and real estate (27.7%). The West Asia conflict, resulting in higher crude prices, led to a contraction of 13.9% in air transport services.
Railway transport also contracted marginally by 0.4% while water transport and postal and courier services registered marginal growth at 5.7% and 3.3%, respectively, in April. The wholesale trade grew by 15.3% year-on-year in April while telecommunication, real estate and insurance sectors expanded by 22.8%, 27.7% and 15.6% respectively. The launch positions the ISP as the services-sector equivalent of the Index of Industrial Production (IIP), giving the government, the Reserve Bank of India (RBI) and financial markets a high-frequency indicator to assess economic activity instead of relying largely on quarterly GDP estimates and indirect proxies such as goods and services tax (GST) collections, purchasing managers’ indices (PMIs) and bank credit. The official statement said the trial series would initially be released to validate methodology and obtain stakeholder feedback before the index becomes part of India’s regular statistical releases. The new indicator arrives as services have emerged as the principal driver of India’s economic growth, accounting for over 53% of gross value added (GVA) and contributing significantly to employment, exports and investment. Unlike the IIP, which measures physical production in manufacturing, mining and electricity, the ISP captures changes in the real output of services. Since services are generally produced and consumed simultaneously and do not accumulate inventories, the index primarily uses turnover as a proxy for production after adjusting for inflation.
The BriefWire