The Index of Service Production (ISP) is India's first comprehensive quarterly index measuring output growth in the formal services sector. Developed by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation, it covers eight major service categories including trade, transport, financial services, and real estate. The approach paper outlines methodology for compilation using administrative data sources, sample surveys, and proxy indicators. ISP aims to provide timely estimates of services sector performance, addressing the current gap in quarterly GDP data where services constitute over 55% of India's economy.

The ISP represents a significant advancement in India's statistical infrastructure, addressing the long-standing challenge of measuring services sector performance in real-time. Unlike manufacturing, which has the Index of Industrial Production (IIP), services lacked a comprehensive quarterly measure despite contributing the largest share to GDP. The approach paper establishes a robust framework using multiple data sources: administrative records from regulatory bodies, enterprise surveys, and proxy indicators like electricity consumption and employment data. The index covers formal establishments across eight service categories, weighted by their contribution to Gross Value Added (GVA). This methodology aligns with international best practices while adapting to India's data availability constraints. The ISP will enhance policy formulation by providing quarterly insights into services sector trends, crucial for a service-driven economy. It supports better GDP forecasting, monetary policy decisions, and sectoral analysis. The timing is particularly relevant as India transitions to a more digitized, service-oriented economy post-COVID, where traditional manufacturing indicators become insufficient for comprehensive economic assessment.