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Informist, Monday, Apr. 27, 2026

NEW DELHI – The National Statistical Office has proposed to use the aggregated goods and services tax data for the compilation of Index of Service Production to capture short-term movements in the services sector. The statistics ministry has been working on Index of Service Production from the annual survey of services sector enterprises to monitor the progress of the services sector. The index will be similar to the Index of Industrial Production, which monitors industrial activity in India.

The Index of Service Production aims to show economic trends that would complement an IIP on the short–term movement of an economy. It will also focus on high-frequency information on the performance of the services sector. This will support computing policy framework, the ministry said. The index holds significance as the services sector contributes more than half of India's GDP and generates jobs. The sector has been a major catalyst for the country's economic transformation in the last few decades, it added.

The Ministry of Statistics and Programme Implementation has been facing challenges in compiling the data and has been unable to assess overall economic performance. "The unavailability of ISP (Index of Service Production) created a critical data gap in assessing overall economic performance," the ministry said. The National Statistical Office and the statistics ministry will use aggregated GST data to monitor the services sector, and not at an individual level, preserving the confidentiality of such disaggregated information.

While the statistics ministry will use GST data, it requires careful analysis of its suitability for statistical purposes. "Firstly, it may be noted that the data available from the GST would be in value terms, the feasibility of its usage would therefore, depend upon availability of appropriate price deflators," the ministry said. As per International guidelines, the preferred deflators to use are mostly Producer Price Indices. For services, which flow mainly from business to customer, use of Consumer Price Indices as a deflator has also been suggested in the absence of PPIs, the ministry said. "One major conceptual difference between PPIs and consumer price indices (CPIs) is that the former does not include taxes linked to sales (VAT, GST, etc.), since they do not represent revenue from the point of view of the producer (but are simply collected and passed on to the tax administration)," the ministry noted.

The Department for Promotion of Industry and Internal Trade is working towards revising the Wholesale Price Index and developing a Producer Price Index. 

A 24-member Technical Advisory Committee on Index of Service Production, constituted in May 2025, have come up with an approach paper on the compilation of the service sector index. The approach paper analyses over 40 sub–sectors of the services sector comprehensively in terms of availability of data on output and their suitability in terms of coverage, the ministry said. It also discusses the availability of the most appropriate price deflators and methods to standardise the base of these deflators. The sub–sectors covered include wholesale and retail trade, transport, banking, insurance, communication, hotels and restaurants, real estate, professional, scientific and technical services, arts, entertainment and recreation, among others, according to the paper.

The ministry has invited views and comments from stakeholders, including academicians, government ministries and departments, state governments, and financial institutions, on the proposed methodology by May 5.  End

Reported by Shweta

Edited by Akul Nishant Akhoury

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