The National Statistical Office (NSO) has announced the development of an Index of Service Production (ISP), a new metric designed to measure the output of the services sector in India. This index will complement the existing Index of Industrial Production (IIP) and enhance the assessment of short-term economic performance.
Purpose and Benefits
The ISP will serve as a crucial tool for policymakers and economists by providing more accurate and timely data on service sector activity. It will also be used to improve the compilation of quarterly estimates, first and second advance estimates, and provisional estimates of the country's national accounts, leading to a more comprehensive understanding of economic trends.
Methodology and Data Sources
The NSO released a consultation paper outlining the proposed methodology for the ISP, which is open for stakeholder comments until May 5. The index will be based on a range of indicators, including turnover, gross value added (GVA), and employment data from formal service sector enterprises. However, the informal sector, which accounts for approximately 33% of total services GVA, will be excluded due to data limitations. Additionally, the health and education sectors, representing about 10% of services GVA, will be temporarily excluded until results from the Annual Survey of Incorporated Service Sector Enterprises (ASISSE) become available.
The introduction of the ISP marks a significant step forward in India's statistical infrastructure, enabling better monitoring of the services sector, which is the largest contributor to the country's GDP. The NSO expects the index to be finalized and rolled out after incorporating feedback from stakeholders.
