SYLLABUS

GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Context: The National Statistical Office (NSO) released the fifth trial edition of the Index of Services Production (ISP), revealing that 17 of the 19 tracked services sub-sectors recorded positive growth in August 2026, with 13 registering double-digit growth.

Key Findings of ISP (August 2026)

• Broad-based Growth: 17 of the 19 services sub-sectors recorded positive year-on-year growth in August 2026, unchanged from July.

• Double-Digit Growth: 13 sub-sectors registered double-digit growth, up from 10 in July.

• Estimated Overall Growth: According to economists, services output grew by approximately 14% in August, compared to 13.5% in July. The Ministry has not yet released an aggregate growth rate for the ISP.

• Fastest-Growing Sectors: Retail trade recorded the highest growth at 19.9%, followed by real estate and repair services at 17.6% each.

• Other Major Performers: Insurance (16.5%), banking (14.9%), professional, scientific and technical services, including R&D (14.2%), IT and computer-related services (13.8%) and administrative and support services (13.1%).

• Transport Sector: Water transport (9.5%), road transport (9.4%) and railway transport (3.7%) recorded positive growth. Warehousing and support activities for transportation grew by 11.2%.

• Contracting Sectors: Air transport recorded the sharpest contraction of 9.6%, marking its fifth consecutive month of decline. Arts, entertainment and recreation also contracted by 4.7%.

• Growth Momentum: According to EY India, the ISP recorded double-digit growth since June 2026, averaging 13.6% over the three months ending August 2026.

About the Index of Services Production (ISP) 

• Nature: A monthly high-frequency macroeconomic indicator that measures short-term changes in the volume of output produced by India's formal services sector.

• Introduced by: Ministry of Statistics and Programme Implementation (MoSPI), through the National Statistical Office (NSO).

• Objective: To provide a timely monthly measure of services-sector activity and strengthen India's macroeconomic statistical framework.

• Counterpart: It is the services-sector counterpart of the Index of Industrial Production (IIP), which measures production in manufacturing, mining and electricity.

• Base Year: 2024–25.

• Coverage: The trial ISP covers 19 selected formal services sub-sectors, accounting for nearly 60% of the formal services sector.

• Scope: Covers formal-sector enterprises only. Core government activities, non-market activities and the informal sector are presently excluded.

• Data Sources: GST data, administrative data and the Annual Survey of Incorporated Services Sector Enterprises (ASISSE).

• Release Frequency: Monthly, with the release scheduled for the 29th of each month.

• Trial Nature: Initially published as an experimental series to assess data quality, test methodology and incorporate stakeholder feedback.

Significance of the Index of Services Production (ISP)

• Addresses a Statistical Gap: Fills the long-standing absence of a dedicated monthly indicator for services-sector production, improving the measurement of India's largest economic sector.

• Improves GDP and GVA Estimation: Provides timely information on services-sector output, supporting the estimation of Gross Value Added (GVA) and improving quarterly and annual GDP estimates.

• Supports Evidence-Based Policymaking: Helps the government, RBI, businesses, investors and researchers monitor sectoral performance and make informed economic decisions.

• Supports Employment and Exports: Better measurement of services activity can help assess developments in a sector that contributes significantly to employment, investment and India's services exports.

• Aligns with Global Practices: Brings India's statistical framework closer to economies such as Japan, China, South Korea and the European Union, which publish similar services production indicators.