IIP-like index for services output by early 2011
India will soon have an index to measure output of services that contribute more than half of its national income but still do not have a periodic measure like the index of industrial production.
By Surabhi & Rishi Shah, ET Bureau |
NEW DELHI: India will soon have an index to measure output of services that contribute more than half of its national income but still do not have a periodic measure like the index of industrial production.
The government is likely to release by early next year regular data on sectors such as road transport, ports, aviation, telecom, post & telegraph and banking, for which the methodology has been firmed up. A full fledged service output index could take some more time.
“We have worked out the methodology for measuring output in about seven sectors,” said CP Chandrasekhar, who chairs the committee that is developing the index. “We will discuss it with users before publishing the index,” said Mr Chandrasekhar, who teaches economics at Jawaharlal Nehru University.
Over the years, services have become the most dynamic sector of the economy. They contributed 57% of the country’s gross domestic product (GDP) in 2009-10, up from a meagre 29% in 1950.
An index for services is expected to help policymakers and analysts get a better understanding of the economy. Apart from the quarterly data on national income, there is no official measure of the performance of the services sector. HSBC’s Purchasing Managers’ Index for services is the most widely watched monthly gauge of the sector at present.
“There is hardly any data available on services, even though it is the most dynamic sector of the economy. It would be great to get some monthly figures, especially for sensitive sectors such as tourism, transportation and communication,” said DK Joshi, chief economist at rating agency Crisil.
Constructing an index of services is not easy given the problems in measuring many of them. The Chandrasekhar panel is working on it since 2007. “Services are very idiosyncratic in their concept as each transaction is different from the other,” said TCA Anant, the country’s chief statistician.
The methodology for calculating output in each sector would be based on different parameters as there is no such thing as a uniform transaction on which you can measure price, he said.
Another problem is availability of data. Unlike the index of industrial production that is available on a monthly basis, the services production data will be available at different intervals.
“We are facing difficulty in collection of data, especially from the private sector,” Mr Chandrasekhar said. Data on some sectors will be released on a monthly basis, but for others like courier services and airlines, where collection is a problem, it would be available on a quarterly or six monthly basis.
The UK’s index of services, a monthly release on output of the services sector, was in the experimental stage for many years before it was reclassified to national statistic status in March 2007 after significant methodological improvements. The service industries account for about 74% of the UK’s gross domestic product.
The government is likely to release by early next year regular data on sectors such as road transport, ports, aviation, telecom, post & telegraph and banking, for which the methodology has been firmed up. A full fledged service output index could take some more time.
“We have worked out the methodology for measuring output in about seven sectors,” said CP Chandrasekhar, who chairs the committee that is developing the index. “We will discuss it with users before publishing the index,” said Mr Chandrasekhar, who teaches economics at Jawaharlal Nehru University.
Over the years, services have become the most dynamic sector of the economy. They contributed 57% of the country’s gross domestic product (GDP) in 2009-10, up from a meagre 29% in 1950.
An index for services is expected to help policymakers and analysts get a better understanding of the economy. Apart from the quarterly data on national income, there is no official measure of the performance of the services sector. HSBC’s Purchasing Managers’ Index for services is the most widely watched monthly gauge of the sector at present.
“There is hardly any data available on services, even though it is the most dynamic sector of the economy. It would be great to get some monthly figures, especially for sensitive sectors such as tourism, transportation and communication,” said DK Joshi, chief economist at rating agency Crisil.
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Constructing an index of services is not easy given the problems in measuring many of them. The Chandrasekhar panel is working on it since 2007. “Services are very idiosyncratic in their concept as each transaction is different from the other,” said TCA Anant, the country’s chief statistician.
The methodology for calculating output in each sector would be based on different parameters as there is no such thing as a uniform transaction on which you can measure price, he said.
Another problem is availability of data. Unlike the index of industrial production that is available on a monthly basis, the services production data will be available at different intervals.
“We are facing difficulty in collection of data, especially from the private sector,” Mr Chandrasekhar said. Data on some sectors will be released on a monthly basis, but for others like courier services and airlines, where collection is a problem, it would be available on a quarterly or six monthly basis.
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The UK’s index of services, a monthly release on output of the services sector, was in the experimental stage for many years before it was reclassified to national statistic status in March 2007 after significant methodological improvements. The service industries account for about 74% of the UK’s gross domestic product.
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