A services index needn't be perfect to be worthy

The government has proposed an Index of Services Production. It won't be easy to construct but even an imperfect one would help by filling a significant gap in India's official statistics

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India's statistics ministry recently proposed an Index of Services Production (ISP), the need for which may seem self-evident, given how this sector's prominence has grown.

"The service sector is the dominant force in the Indian economy, contributing over 50% of the Gross Value Added [GVA]," as a discussion paper on the idea released by the ministry notes, "It has long been central to economic transformation, consistently driving growth, generating employment, and attracting investment across decades." That's the good part of our services story. The not-so-good part is the absence of accurate, disaggregated and timely data on the services sector along the lines of India's monthly Index of Industrial Production (IIP). A monthly ISP that complements the IIP would provide a better picture of the economy, enabling better analysis and policy formulation. After all, India has more or less leapfrogged the typical manufacturing stage in its structural transformation, going straight from an agrarian to a services-led economy.