Trial Index of Services Production shows sustained momentum in August

New Delhi: India’s services activity remained broad-based in August, with 17 of 19 sub-sectors recording growth and 13 posting double-digit increases, indicating sustained momentum in formal-sector services despite mixed signals from manufacturing and external trade, showed the Centre’s fifth trial Index of Services Production (ISP) on Thursday.

The 19-sector index covering about 60% of the services sector provides a new monthly gauge of activity in a sector that accounts for more than half of India's economy.

The overall ISP will be brought out later after studying the stability and resilience of sub-sectoral ISPs and improving the overall coverage of services, the ministry of statistics and programme implementation said in a statement.

Top sub-sectors that reported continued strong growth in are accommodation and food (11.9%), retail trade (19.9%), repair services (17.6%), administrative and support services (13.1%), banking (14.9%), professional, scientific and technical services including research and development (14.2%), IT and computer-related services (13.8%) and real estate (17.6%).

While rising energy prices due to the West Asia war have continued to keep air transport services growth in the negative zone at -9.6%, growth of arts, entertainment and recreational services also remained in the negative zone at -4.7%.

Growth in other transport services—railways, roadways, and waterways—also remained in the single digits at 3.7%, 9.4%, and 9.5%, respectively.

Postal and courier services and information and broadcasting services, which were in the negative zone in earlier months, showed sustained growth of 13.2% and 7.2%, respectively. Repair services, where growth contracted in July, also made a smart recovery, registering double-digit growth in August.

While retail trade saw high double-digit growth in August, the wholesale trade growth remained relatively lower at 102%. Telecommunication, warehousing and support activities for transportation expanded by 11.8% and 11.2%, respectively.

"The ISP shows a year-on-year growth of 14.0%, thereby confirming a robust growth momentum, said D.K. Srivastava, chief policy advisor, EY India. “The ISP has shown double-digit growth momentum since June 2026, with an average growth of 13.6% over the three months to August. Given the weight of the services sector in overall GDP, these trends indicate the potential for healthy GDP growth in the second quarter of 2026-27. This is also confirmed by the second quarter IIP growth, which averaged 7.3%.”

Services sector data

The ISP has been designed as the services-sector equivalent of the Index of Industrial Production (IIP), giving the government, the Reserve Bank of India (RBI) and financial markets a high-frequency indicator to assess economic activity instead of relying largely on quarterly gross domestic product (GDP) estimates and indirect proxies such as goods and services tax (GST) collections, purchasing managers’ indices (PMIs) and bank credit.

The trial series would initially be released to validate methodology and obtain stakeholder feedback before the index becomes part of India’s regular statistical releases.

The new indicator arrives as services have emerged as the principal driver of the country's growth, accounting for over 53% of gross value added (GVA) and contributing significantly to employment, exports and investment.

Unlike the IIP, which measures physical production in manufacturing, mining and electricity, the ISP captures changes in the real output of services. Since services are generally produced and consumed simultaneously and do not accumulate inventories, the index primarily uses turnover as a proxy for production, adjusted for inflation.

Economists believe the ISP could become one of India’s most closely watched macroeconomic indicators, complementing the IIP in assessing overall economic momentum.

“The August ISP figures point to resilient domestic demand supporting services activity, and as a newly introduced experimental series, the ISP is a welcome addition to India’s statistical framework,” said Pranjal Ghate, economist, Brickwork Ratings.

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Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He finds reporting to be a passion that provides the necessary adrenaline rush and keeps you going.