Double-digit growth in 8 of 19 sectors such as accommodation & food, real estate, retail trade and banking supported overall services growth.
| Photo Credit:
Formal services sector showed some moderation in May as only 8 out of 19 sub-sectors recorded double-digit growth as against 14 in April, per Sub-Sectoral Trial Index of Services Production (ISP), released on Wednesday.Though ‘Accommodation and Food’ continues to be top performer in the month, but its growth rate has come down to 27.4 per cent in May as against 37.2 per cent of April. At the same time, ‘Postal and Courie’ and ‘Information & Broadcasting’ joined ‘Air Transport’ in the list of sub-sectors recorded de growth. However, ‘Railway Transport’ moved to growth territory in May from de-growth in April. The first of sub – sectoral Trial ISP with the base year of 2024-25 was released on July 15. The index comprising 19 sub sectors which cover about 60 per cent of the services sector.Though the Ministry has not released the headline ISP growth figures, DK Srivastava, Chief Policy Advisor, EY India, estimated this at 9.8 per cent in May against 20.8 per cent in April. Rajani Sinha, Chief Economist with CareEdge, felt that the moderation in growth was due to lower growth in retail trade, road transport, IT and admin & support services.Growth of key servicesAccording to Srivastava, average growth for eight key services accounting for nearly 87 per cent of the total weight of the covered 19 services was 10.3 per cent in May. “There are clear indications of a robust growth momentum for the April-June quarter of FY27 with IIP growth in this quarter showing an average growth of 5.7 per cent and services (ISP) sector for the first two months of this quarter showing an average growth of 15.3 per cent,” he said.Sinha said that double-digit growth in 8 of 19 sectors such as accommodation & food, real estate, retail trade and banking supported overall services growth. Notably, air transport has declined compared to last year for the second consecutive month, likely reflecting the continued impact of disruptions to air travel amid conflict in West Asia and elevated fuel prices. However, the sector showed sequential recovery, supported by the onset of the travel season and some stabilisation in flight operations.Overall, India’s economy continues to navigate a challenging global environment marked by renewed geopolitical tensions. Amid these headwinds, “the services sector remains a key driver of economic activity and has demonstrated considerable resilience. While services output growth moderated in May, we expect the sector to maintain its underlying strength in the months ahead,” she said.According to the Statistics Ministry, the monthly ISPs are being published on an experimental basis. The publication of trial series would enable the Ministry to examine data quality, test its resilience and receive feedback of stakeholders and users. The services sector contributes more than half of the country’s gross value added (GVA). With the launch of the ISP, all three broad sectors of the economy, services, industry and agriculture, will now have regular monthly or quarterly production indicators.The ISP currently covers only formal sector enterprises because it is based on GST and administrative data. Accordingly, services which are not covered in ISP are those which are either related to core government activities or are dominated by non-market activities and the informal sector,” the Ministry said.Published on July 29, 2026
