India to widen services production index to include education, health and defence
The statistics ministry plans to expand the monthly Index of Services Production to cover education, healthcare, public administration and defence, raising its coverage to 78.4% of services GVA from about 60%. The proposed framework could use UPI transaction data to track private education and healthcare activity and government expenditure data for public services.
New Delhi: The Indian statistics and programme implementation ministry plans to broaden the Index of Services Production (ISP) to include education, healthcare, and public administration and defence, according to a recent announcement. This expansion aims to enhance the index's coverage, increasing its share of service sector gross value added (GVA) from approximately 60% to 78.4%.
Currently, the ISP, which is compiled on a trial basis, covers 19 service sub-sectors. The ministry aims to compile a unified, all-encompassing Index of Services Production by aggregating sub-sectoral indices, providing a representative reflection of short-term movements in India's services sector. The ministry has invited stakeholder feedback on its proposal for the expanded index, with a deadline for submissions set for October 16.
To measure the private education and healthcare sectors, the ministry proposes using Unified Payments Interface (UPI) transaction data, classified by merchant category codes, along with relevant price indices. For public education and health services, the ministry suggests employing Public Financial Management System (PFMS) expenditure data as an output proxy.
Measuring public administration and defence, which make up 10.68% of services GVA, presents a unique challenge, as these are largely non-market services. To tackle this, the ministry proposes a sum-of-costs approach, using employee compensation and operational expenditure to estimate output. While the expansion holds promise, the ministry also points out certain limitations, such as UPI measures being based on monetary transactions rather than physical output, and government expenditure potentially showing sharp monthly fluctuations due to accounting and payment cycles.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
