India’s new services index debuts July 14, skips health and education

India’s official statistical machinery will release the index of services production starting July 14, with a 2024 base year. The new gauge, called ISP, covers 13 sectors including trade, hotels, transport, financial services, real estate and information technology. Health and education are excluded – two sectors that together account for roughly a fifth of gross value added in services, government data show.

Government statisticians settled on the 13-sector composition after consultations with the Reserve Bank of India, industry bodies and state statistical bureaus, an official involved in the process said. The index will be published monthly with a two-month lag, matching the schedule of the index of industrial production (IIP).

Services account for more than half of India’s GDP. Until now, policymakers and economists lacked a high-frequency read on services activity comparable to the IIP for factory output. The ISP is designed to fill that gap. It covers trade, hotels and restaurants, transport, storage and communications, financial services, real estate and professional services, and information technology. The exclusion of health and education means the index will track a narrower slice of the services economy than the broader GDP measure.

A Mumbai-based economist who tracks Indian macro data said the ISP could sharpen real-time estimates of quarterly GDP growth. Current nowcasting models rely on a mix of indirect indicators and corporate filings. A more direct services gauge would reduce the margin of error, the economist said.