India's Ministry of Statistics and Programme Implementation plans to expand the Index of Services Production to cover over 80% of the sector. The government is also working to integrate the Producer Price Index into GDP calculations to improve economic accuracy. This update aims to provide a more detailed and reliable picture of national economic activity by including sectors like health and education.
The Ministry of Statistics and Programme Implementation (MoSPI) is working on a major update to how India measures its economic health. Secretary Saurabh Garg announced that the government is expanding the Index of Services Production (ISP) to include more than 80% of the services sector. Currently, the index covers only about 30% of the economy, leaving out large segments that are vital for understanding national growth.
Expanding Data Coverage
The expanded index will include critical areas such as education, health, and owner-occupied dwellings. By incorporating these sectors, the government hopes to create a more comprehensive view of the services economy. This change is intended to make the ISP more representative of overall economic activity. MoSPI plans to release a composite services index after the data collection processes are stabilized. This will help analysts and policymakers better track the performance of the services sector, which is a major contributor to India's GDP.
Modernizing GDP Calculation
Beyond the services index, the government is looking at changing how it calculates GDP by integrating the Producer Price Index (PPI). Currently, India uses the Wholesale Price Index (WPI) for many calculations. Integrating the PPI is expected to provide a more accurate reflection of price changes for producers, potentially leading to better GDP deflation figures. Officials are aiming to incorporate this new data into GDP estimates as early as the first quarter or by the second quarter of the current fiscal year. Additionally, the ministry plans to release GDP back series data before the end of the year.
Understanding Output vs Value-Added
There have been questions about why some services sectors, such as retail and accommodation, show high double-digit growth in recent data. MoSPI clarified that the ISP measures the volume of output, which is similar to the Index of Industrial Production (IIP). This is different from GDP, which calculates the value added to the economy. The ISP data relies heavily on administrative sources, such as GST returns and collections, to track top-line activity. Because this measure tracks volume rather than profitability, it may show higher growth rates than traditional value-added metrics. The ministry also confirmed that corporate capital spending intentions remain strong, with recent surveys showing a 96% realization rate for planned investments in FY26. Investors should look for further updates on the composite index release and the final timeline for the integration of PPI into official GDP reports.