The Ministry of Statistics and Programme Implementation (MoSPI) is considering using aggregated Goods and Services Tax (GST) data on outward supplies as a key proxy to track short-term production trends in India’s dominant services sector.

The proposal forms part of MoSPI’s broader initiative to develop an Index of Service Production (ISP), a high-frequency indicator akin to the existing Index of Industrial Production (IIP), to better capture real-time movements in services sector, which contributes over 50% of the country’s Gross Value Added (GVA).

MoSPI proposed to compile the ISP with 2024-25 as the base year. “At present it is proposed to keep 2024 – 25 as the base year for the purpose of compiling trial indices,” the approach paper reads.

To ensure feasibility, the ministry aims to cover about 70% of the services sector’s GVA for compiling an overall ISP, while acknowledging exclusions of around 33% of services GVA, including public administration, defence, certain non-market financial services, ownership of dwellings, and informal/unincorporated segments.

The unavailability of ISP created a critical data gap in assessing overall economic performance, MoSPI said. It stated that currently, quarterly estimates  as well as the First Advance Estimates, Second Advance Estimates (SAE), and Provisional Estimates of Gross Value Added (GVA) are compiled using the benchmark-indicator method with limited high-frequency data.

These early releases provide services GVA only in highly aggregated form across just three broad groups: Trade, Hotels, Transport, Communication & Broadcasting; Financial, Real Estate, IT & Professional Services; and Public Administration, Defence & Other Services.

Detailed disaggregated data for 13 or more sub-sectors becomes available much later, only at the time of First Revised Estimates (FRE) or Final Estimates. An ISP would serve as a valuable high-frequency indicator to augment the list of available data sources, enabling more timely, accurate, and granular quarterly and advance GDP estimates for the services sector, MoSPI said.

The approach paper outlines three sources, including GST data, to obtain data on the service sector. It states that data on outward supplies for different service activities as obtained from monthly and quarterly GST returns has potential that needs to be explored for feasibility for compilation of sub – sectoral ISPs as well as overall ISP.

The paper states that GST-based indices would focus on market output and exclude GST-exempt areas such as health and education, which would draw on the new Annual Survey of Incorporated Services Sector Enterprises (ASISSE), starting 2026-27.

It further stated that data from ASISSE will be used for compiling ISPs of those services sub–sectors for which no other data source is available. The ASISSE will give estimates of indicators like gross value added (GVA), fixed capital/capital formation, employment numbers, turnover/gross sale value, etc.