New Index of Services Production will be based on GST, admin and survey-based data

The new upcoming Index of Services Production (ISP) will rely heavily on Goods and Services Tax (GST) data to arrive at its estimates of services sector production, the report of the technical committee tasked with designing the index framework has said. 

Where GST data is not available, the index will use a combination of administrative data and the Annual Survey of Incorporated Services Sector Enterprises (ASISSE), which would make the index a “unique blend” of multiple data sources and methodologies, the report said. 

The first data release of the index, which is the first such attempt at consistently and periodically quantifying the formal services sector, will be on July 29.

“The major source of data for compilation of ISP is GST,” the report noted. It did, however, acknowledge that this approach would leave out some sectors. 

“Coverage under GST by definition is restricted to the entities registered with the GST,” the report noted. “In India, in case of services or mixed supplies, registration under the GST Act is not mandatorily required for small businesses having all-India aggregate turnover below ₹20 lakh (₹10 lakh if the business is in the States of Manipur, Mizoram, Nagaland and Tripura).”

It further said that the sample drawn for the ASISSE is also based on the framework set out by the GST Network. 

“Thus, these two sources cover the formal sector enterprises registered under GST Act/Companies Act only,” the report said. “Based upon these considerations, the Technical Advisory Committee of the ISP recommended that the coverage of the ISP may be treated as covering the formal sector.”

In other words, the ISP should not be treated as a measure of the informal services sector in India. 

The committee recommended that the ASISSE be used to provide data on health residential care and the education sector. It added that data on railways, air transport, banking and insurance can be compiled based on administrative data, since this can be obtained from the Railway Board, Directorate General of Civil Aviation, Reserve Bank of India, and the Insurance Regulatory and Development Authority of India.