New Delhi: Eight of the 19 industries tracked under India’s trial Index of Services Production (ISP) posted double-digit growth in May, while another eight expanded from a year earlier, signalling broad-based strength in the formal services economy despite mixed signals from manufacturing and external trade, according to data released on Wednesday.
“As per the Index of Services Production (ISP), growth of the covered 19 services amounting to 60% of total services output was 9.8% in May 2026. This showed a slight deceleration from the growth of 20.8% in April 2026. The main services accounting for growth higher than 10% in this month are retail trade, accommodation and food, telecommunication, banking, and IT and computer related services,” said DK Srivastava, chief policy advisor, EY India.
“Average growth for eight key services accounting for nearly 87% of the total weight of the covered 19 services was 10.3% in May 2026. There are clear indications of a robust growth momentum for the 1Q 2026-27 with IIP growth in this quarter showing an average growth of 5.7% and services (ISP) sector for the first two months of this quarter showing an average growth of 15.3%,” he added.
The ISP is a monthly gauge designed to do for services what the Index of Industrial Production (IIP) does for manufacturing, giving policymakers, the Reserve Bank of India (RBI) and financial markets a timelier read on activity in the country’s largest sector.
The trial series, with 2024-25 as the base year, aims to provide a high-frequency measure of services activity instead of relying largely on quarterly GDP data and indirect indicators such as GST collections, purchasing managers’ indices (PMIs) and bank credit.
The gauge
The 19 sectors currently covered account for about 60% of the services economy. Overall ISP will be released later after studying the stability and resilience of the sub-sector indices and improving coverage, the Ministry of Statistics and Programme Implementation (MoSPI) had said in a statement while launching the trial series.
Accommodation and food services led growth at 27.4% in May, followed by real estate at 17.7% and retail trade at 13.3%. All three, however, expanded at a slower pace than in April, when the inaugural trial series was released.
Rail transport recovered to 3.4% growth in May, while road transport expanded 4.4% and water transport 5.6%, according to MoSPI. Wholesale trade grew 3.7%, while telecommunications, banking and insurance expanded 11.8%, 12.1% and 2.7%, respectively.
IT and computer-related services grew 10.3% during the month, while professional, scientific and technical services, including research and development, expanded 11%. Administrative and support services grew 5.0%, while arts, entertainment and recreation rose 1.6%.
Air transport services contracted 2.8% in May as the West Asian conflict and higher energy prices weighed on the sector. Postal and courier services and information and broadcasting services also contracted 1.0% and 7.6%, respectively.
According to the statement issued earlier, the trial series would initially be released to validate the methodology and obtain stakeholder feedback before becoming part of India’s regular statistical releases.
Why it matters
Services account for more than 53% of India’s Gross Value Added (GVA), making the ISP a monthly gauge of the economy’s biggest growth engine.
Designed as the services-sector counterpart to the Index of Industrial Production (IIP), the ISP tracks real services output using inflation-adjusted turnover rather than physical production. Its biggest methodological innovation is the use of Goods and Services Tax (GST) data, with business filings mapped to National Industrial Classification (NIC) codes and deflated to estimate real output. For activities outside the GST framework, including parts of railways, health, education and insurance, the index draws on administrative databases and the Annual Survey of Incorporated Services Sector Enterprises.
The index currently covers the formal services economy, including trade, transport, banking, insurance, telecommunications, hospitality, real estate, information technology, professional and administrative services, and arts and entertainment. Private health and education will be added later as more comprehensive survey data become available, while largely non-market activities such as public administration, defence and government health and education remain excluded.
Economists expect the monthly series to improve short-term GDP forecasting, help the RBI gauge demand conditions and provide businesses with a high-frequency indicator of sectoral trends, complementing the IIP in tracking overall economic momentum.