UPI & govt salaries may be used to gauge health, edu services growth, Pg19

Key Highlights:

• The Ministry of Statistics and Programme Implementation (MoSPI) is considering using Unified Payments Interface (UPI) payment data and government salaries.
• This data would be utilized to measure the growth of education, health, and public administration and defence services.
• The initiative aims to expand the coverage of the new Index of Services Production (ISP).
• This proposal comes despite a sub-committee of the Advisory Committee on National Accounts Statistics (ACNAS) previously advising against using UPI data for Gross Domestic Product (GDP) calculation due to stability concerns.
• MoSPI now asserts that UPI transaction data is showing a "clear stabilising trend" and is entering a "new phase of market maturity".

Detailed Insights:

• The Index of Services Production (ISP) is a monthly high-frequency macroeconomic indicator developed by MoSPI to track short-term changes in the real output of India's formal services sector, akin to the Index of Industrial Production (IIP) for the industrial sector.
• The services sector contributes over 50% to India's Gross Value Added (GVA), and the ISP aims to provide a dedicated monthly measure for its performance.
• The proposed expansion is expected to increase the ISP's coverage to 78.4% of services GVA from its current approximately 60%.
• The sub-committee's report, released in February, had suggested exploring UPI data for Private Final Consumption Expenditure (PFCE) estimation once its stability was confirmed.
• PFCE represents the total spending by households and non-profit institutions on goods and services for consumption and is the largest component of GDP when measured by expenditure.
• MoSPI views UPI as transitioning into a "highly mature and resilient utility," anticipating future growth to stabilize within a consistent band.
• The Advisory Committee on National Accounts Statistics (ACNAS) plays a crucial role in advising MoSPI on methodologies and the inclusion of new data sources for national accounts.

Key Concepts Involved:

• Index of Services Production (ISP): A monthly high-frequency indicator developed by MoSPI to measure short-term changes in the real output of India's formal services sector.
• Private Final Consumption Expenditure (PFCE): The total expenditure incurred by households and non-profit institutions on goods and services for final consumption, constituting the largest component of GDP by expenditure.
• Unified Payments Interface (UPI): An instant real-time payment system developed by the National Payments Corporation of India (NPCI), enabling inter-bank peer-to-peer and person-to-merchant transactions.
• Ministry of Statistics and Programme Implementation (MoSPI): The central government body responsible for the collection, compilation, analysis, and dissemination of official statistical data and monitoring government programs in India.