Key Details
MoSPI began publishing the monthly ISP for the formal sector on a trial basis in July 2026, using 2024–25 as its base year. The new paper proposes ways to measure services that the initial 19-subsector index could not readily capture.
Proposed addition | Share of services GVA in 2024–25 | Main proposed indicators |
|---|---|---|
Education | 7.15% | Public expenditure and education-related Unified Payments Interface (UPI) transactions |
Human health and residential care | 2.96% | Public expenditure and health-related UPI transactions |
Public administration and defence | 10.68% | Government employee compensation and operating expenditure |
The proposed additions would bring total ISP coverage to approximately 78.4% of services GVA. MoSPI has invited comments on the approach paper by 16 October 2026.
The Trial Index Leaves Out Major Public and Tax-Exempt Services
India’s services sector contributes more than half of national gross value added, yet timely measurement of its output is difficult. The existing trial ISP draws heavily on high-frequency sources such as Goods and Services Tax records, banking data and transport activity. These work less well for education, healthcare and government services, where activity may be tax-exempt or provided without a market price.
The proposed expansion would therefore change more than the index’s size. It would bring substantial public and non-market activity into a monthly measure that currently covers mainly formal, market-oriented services.
MoSPI Proposes Different Measures for Different Services
For education and health, the paper separates public provision from private and household spending. It proposes using central-government expenditure as an indicator for the public component and UPI payments classified by merchant activity for the private component. Price indices would be used to adjust those monetary figures so that higher prices are not simply counted as more services produced.
Public administration and defence cannot be measured meaningfully through sales. Here, MoSPI proposes using the costs of providing the services—principally staff compensation and operating expenses—with central-government data from the Public Financial Management System and monthly state-account data available through the CAG.
Wider Coverage Will Still Depend on How Well the Proxies Work
A payment is not the same thing as a lesson taught or a patient treated. UPI values can change when people switch payment methods, as well as when service use changes. The paper also says monthly state spending on public education and health institutions is not separately available at the required frequency, so central-government spending would serve only as a broad directional indicator for those components.
These measurement choices are central to the consultation. They will shape how reliably the expanded index distinguishes a change in real service activity from a change in prices, payments or government accounting cycles.
Policy Relevance
A broader ISP could give policymakers a more timely view of movements in India’s largest economic sector, including services that are largely absent from the current trial measure. That would make monthly economic monitoring less dependent on indicators drawn mainly from market transactions.
Coverage and accuracy are separate questions. Adding education, health and government services would make the index more representative by sector; the usefulness of each new sub-index will depend on whether its monthly indicators track changes in services delivered. MoSPI’s consultation is therefore an opportunity to test the proposed data sources and price adjustments before the expanded series is finalised.
Follow the Full Approach Paper Here: MoSPI, An Approach Paper on Expanding the Scope and Coverage for the Index of Services Production