Filling the blind spot: India’s new services index finally arrives

Starting July, the government will debut a high-frequency tracker for the services sector, aiming to mirror the industrial production index to better capture India’s true economic pulse.

For years, policymakers have relied on the Index of Industrial Production (IIP) to gauge the health of factories and manufacturing, often squinting at the rest of the economy through a blur of lagging data. That is set to change next month. The Ministry of Statistics and Programme Implementation (MoSPI) has confirmed the launch of a new Index of Service Production (ISP), a high-frequency indicator designed to track the heartbeat of a sector that has accounted for over half of India’s gross value added for more than a decade.

The index will use 2024-25 as its base year, providing a long-overdue formal lens on critical engines of growth like banking, telecommunications, transport, and professional services. By capturing everything from wholesale and retail trade to hospitality, the ministry is finally creating a formal counterpart to the IIP. The first trial run, covering FY26 and data from April 2026, is scheduled for release on July 14, followed by monthly updates on the 29th of each month.

A new reliance on GST data

Building this index is no small technical feat. The ministry is tapping into three distinct streams: administrative datasets, the Annual Survey of Incorporated Services Sector Enterprises (ASISSE), and—notably—Goods and Services Tax (GST) data. This marks the first time GST filings will be harnessed for such a significant statistical application.

However, the ISP is not an all-encompassing net. Much of India’s informal economy, along with government-centric functions like public administration, defense, and private household services, will remain outside its scope. While health and education sectors are slated for future inclusion once the ASISSE results fully mature, the initial focus remains on the formal, measurable services landscape. To steer the project, the government has empaneled a Technical Advisory Committee led by Debjani Ghosh.

Why it matters

The introduction of the ISP is a watershed moment for Indian economic monitoring. For years, the "services" side of the GDP has been the country’s biggest growth driver, yet it remained the most opaque. Investors and policymakers currently have to settle for anecdotal evidence or delayed quarterly estimates, making real-time intervention difficult.

By institutionalizing this data, the government is moving toward a more granular, evidence-based approach to policy. If the index succeeds in its trial phase, it will drastically reduce the "information lag" that has historically hampered our understanding of consumer demand and sector-specific health. In a post-pandemic era where digital services and formal retail are shifting rapidly, having a pulse on the service sector isn't just a statistical exercise—it is essential for managing the economy in real-time.