Finance Current Affairs 20th-21st July | GA | RBI 247 | RBI Grade B 2027 Preparation | Anuj Jindal

[00:00:00]Hi everyone, good evening. Welcome to RB 247 series where we cover finance current affairs. My name is Shika Dal and I'm your mentor for finance. Just confirm me once if the audio and video is fine. Then we are going to proceed with the session.

[00:00:20]I hope all of you are doing great. The preparation is going well.

[00:00:32]Good evening.

[00:00:34]Confirm audio and video is fine or not.

[00:00:38]Okay, great. All right. So, today we are covering news from 20th to 21st of July.

[00:00:45]Right. So these are the days that we are covering today and we are essentially going to cover these two topics for today's session which are both related right these both these news are related to index of services production and the second article is related to the release of the first index of services production trial release data sectors that we're going to discuss and in the first article We are going to understand what do we mean by index of services production. Right? So this is these are the topics for today's session.

[00:01:28]Good evening Ammon.

[00:01:30]Okay.

[00:01:32]Take session. So first of all when I talk about index of services production what do you guys think we mean by index of services production? We already have an index in place which is related to manufacturing sector. Can anyone of you name me that specific index that is already there? Let's see how many of you are already aware about the existing index and the new index that we are going to talk about. Okay.

[00:02:01]Did we class did we start the class early today? I think a lot of people are still joining in.

[00:02:07]Okay.

[00:02:10]So you guys have to tell me what is the other index for the manufacturing sector that is already running right and then we're going to understand what is this index of services production why is it being introduced how it is going to be calculated what are the involved ministries and everything related to That okay think I'm assuming no one is aware of the existing index even if you do not know. Okay. We have index of industrial production. Guyri is absolutely right.

[00:02:58]IIP. So we already have an index called IIP. Index of industrial production which is existing to measure the change in the value of output which is produced by various industries. When I'm talking about industries I'm talking about the manufacturing sector. Right? We have three sectors manufacturing, agriculture and services. when we talk about the sectors in the economy. So already manufacturing index but when I spoke about the services sector how do we measure the gross increase in the output that is being contributed by the services industry we did not have any index for that and now ministry of statistics and program implementation is introducing this index of services production from July 2026 now this index was in conversation since last year last year index introduced Right? Various committees were being set up. Various experts were invited to basically see how this index can be calculated. What should be the base year for this index? What kind of services should we include in this index? And how do we capture the data that is required to basically um capture the increase in the output of services industry every month or every year for that matter.

[00:04:12]Okay. So why do we need to basically uh introduce this specific indicator? First of all, this is going to serve as a macroeconomic indicator to measure changes in the output of the formal services sector. Right? Services sector is very very important for our economy.

[00:04:29]We already read so many times that um the services sector is growing even when the economy is even when the global economy is going down. So we need to capture its data also. It contributes more than 50% of India's gross value added. So it is a very heavy chunk of the entire output that we produce in the economy. Right? So you major reasons. So similar indicator already. So now we are planning to introduce that. Now what do I mean by index of services production useful?

[00:05:02]Let's take a look at that. So who is going to use first of all this index use? This index is going to be used for national accounting. So whenever we are nationally accounting uh the production the gross value of output for the entire economy this index is going to be used we are going to pick up data from this index. So there are various economic ministries or departments let's say economy uh ministry of commerce and industry services they are also going to pick up data from this specific index there certain domain experts or researchers they are also going to use this data. Now how will this help? This data is going to provide timely high frequency insights on services sector performance to data monthly month average. That is how this index is going to help in strengthening monitoring of economic activity evidence-based policym and it will enable economic forecasting and business cycle analysis.

[00:06:08]Now the next question is whether when we talked about WPI also PPI so government initially because there's a lot of data compilation here they bring the index in parts releases and probably in in an year we develop a mechanism where we are fully able to publish the final data trial index financial year 256 and April 26 now let's understand this here what do I mean by trial indices for FY 2526 confusion and April 2026 so here I'm saying that the base year her index base year 204 to 25 April 2026 April 2025 data comparison 26 growth. Let's say I say that the growth in April 26 is 35%. So I'm basically comparing the data of April 2026 with April 2025. So that is the first trial data that I'm going to calculate. Secondly, they are saying that I'm also going to calculate the data for financial year 2526.

[00:07:40]Financial year 256, April 26, April 26.

[00:07:56]That is my data for financial year 2526.

[00:08:00]Right? So I hope you are clear on this specific part how we are calculating two types of data here. One is the monthly data and one is the financial year data.

[00:08:09]So this is the first trial data monthly trial indices with a lag of 60 days on 29th day of every month. That is how the data is going to be released. Base year is going to remain at 202425.

[00:08:23]Right? So I hope we are clear on this specific part. How is this specific index calculated? What is the base year?

[00:08:30]How do we calculate the monthly data?

[00:08:31]And how do we calculate the annual data?

[00:08:34]Right?

[00:08:36]Now moving on to the next part. Why was IP not introduced earlier? So this must be a question in your mind when we already know that services sector is so important. Why were we not capturing it earlier? So reason first of all intangible nature of services. So we know when I'm talking about service sector be it banking, insurance, hospitality the nature of service is intangible. I'm not essentially giving a physical product. So measurement what kind of services are being produced in the economy. Lack of high frequency data collect we did not have very good sources frequently data collect maybe I'm getting data quarterly um halfearly or yearly I do not have data for every month. Next is absence of suitable price indices. Suitable price indices. Then diverse nature of services. When I talk about these services sector, I have uh hospitality, I have um airways and a lot of these data are compiled by different ministries. Single ministry data compile. So these are the reasons why it was not introduced earlier. Now how are we able to do it now when it was not possible to do it earlier? For that we are saying that we have improved availability of data right. We have been able to extensively introduce GST GST GST monthly.

[00:10:15]So GST [clears throat] basically record in the form of your turnover right. So GST data on the outward supplies of service producing units is recorded. This is going to help estimate the monthly output and growth of the services sector making it possible to compile the ISP.

[00:10:36]Apart from that there [clears throat] are certain sectors which are not covered by GST for example health and education. For that we we had introduced something called a CSA fullform annual survey of incorporated services sector enterprises. So we are going to use this specific data GST specifically capture.

[00:10:56]So we have two sources two very good sources now. One is GST and second is a CCA. So these are the two data sources that we are going to use right now.

[00:11:08]Okay, I think the screen seems to have been stuck. Let me just just give me a moment. I will start the screen again.

[00:11:49]I hope we have been able to understand everything that we have covered so far.

[00:11:54]Let me just restart this and then we're going to move ahead.

[00:12:34]Okay.

[00:12:36]So starting back what has made the compilation possible now that we already understood right. Moving on to the next thing which is what are the major data sources that we have h so what are the major data sources that we have? We have already seen we have GSC data, we have a CC data and then we have something called as administrative or secondary data. This is basically the data which is covered by various government departments and ministries. So what are the sectors covered in these specific data sources?

[00:13:08]You can take a look. Okay. So up your health or education services these are primarily going to be taken from this data. Rest of majority of the data is going to be taken from the GST data and the rest of the data will be taken from the administrative or secondary data.

[00:13:23]Now what is the base year of ISP? We've already seen the base year is 20 24 25.

[00:13:28]Now why have we taken 242 as the base year? The reason is it is a very recent and normal year rightfier is also going to align with a concept called deflator for most service sectors. We're going to come to that what do we mean? What do I mean by deflator here? So we are going to take a look at that also. Now how do we assign weights to different service sectors?

[00:13:59]For example, I say under the service sector I have banking, I have insurance, right? I have hospitality service sector weight assigned. The weight of each service sector is going to depend on their contribution in the gross value added as reported in the national account statistics.

[00:14:31]weights, right?

[00:14:33]Okay. Somebody could just confirm me once if the audio and video and the screen is fine. It is looking fine to me. I just want a confirmation once if it is looking fine to all of you because sometimes we realize after the session is done that the screen or the audio was not coming. Okay, all good. So basis for weights I'm discuss release date 29th of every month why GVA based weights are being used because they are going to tell you the economic importance of each sector that I'm talking about compilation formula compilation formula there is an index lace peers volume index I'm sure you guys must have read this in ESI fixed weight index just this index is basically used to see how much volume is being contributed by each service sector and basis that you assign different weights to different services. So this is a basic thing maybe when we are reading ISP you guys must be thinking but everything is simple we need to take a look at all of these things so sectors because we don't have that kind of resources so we are going to begin with these major service sectors sectors first. So this is a list of sectors that they have given to us and under that we have certain sub sectors also. Right? So this is the list that is going to be covered. Now there going to be some services that will remain excluded by ISP. Now what are these services? We have certain services related to government activities like public administration and defense, government health services, government education services. Now these services are excluded. Maybe when I'm talking about government activities the kind of excluded services these are services which are related to your national um defense and all of these kind of things.

[00:16:37]So maybe we that's why we are excluding these kind of services. Then we have certain other financial services which are there apart from banking and insurance for example central bank activities money market funds right so these are the services that are related to the financial security of the entire nation that's why we are excluding these kind of services then social and personal services social work activities we are not really u interested in measuring their contribution maybe household and international activities private household activity they remain excluded and and then some other activities like gambling and betting activities. So these are the excluded services by ISP. Now what are the kind of indicators that we're going to measure ISP?

[00:17:31]on various kind of services right so when I'm taking quantity based indicators I'm essentially measuring the kind of physical units that you might have produced right for example The indicator that I will use to measure the input in air, transport and railways value based indicators basically GST data use for turnover, sales, revenue and things like that. For example, if I talk about banking, insurance, hotels, telecom and these kind of service industries right now there's a concept of deflators which is going to be used in ISP. What do I mean by deflator? Deflator basically means removing the impact of price changes from the value of services. For example, let's say banking services output 200 in terms of value. When I talk about value, I'm talking about output and price both. Now there's a possibility that there was no increase in the output. But this change in value is merely due to change in price. Basically inflation.

[00:18:49]So for that purpose we use the concept of deflator nominal value price say I remove the impact of price that is inflation and I show only the real value right. So that is the thing that we are talking about here we are going to use deflators while calculating ISP data. We are going to use different kind of deflators depending on what kind of service we are providing. Right? So this was the first article where we have discussed what do we mean by ISP deflator use output measure what kind of service sectors are included so I hope we have been able to understand that the next part is it's first trial release index of services production data so first trial release for April 26 19 service sectors include which contribute for around 60% of India's services sector top sectors include 60% service sector basically capture base year 242 out of the 19 subsectors 14 sub sectors have recorded doubledigit growth in April 26 as compared to April 2025 now let's take a look at the data also.

[00:20:17]What is the data of these 14 subsectors?

[00:20:20]So we are take taking a look at the top five subsectors here.

[00:20:39]What is this yearly data? I'm comparing I'm taking out the average of all the months of basically the financial year 2526. So accommodation and food services growth 35.6% 6% in both yearly and monthly data followed by retail trade, repair services, wholesale trade, road transport you the sectors are changing a bit when I'm talking about the monthly growth to top five sectors. We need to remember these and especially for the first trial release. Right [sighs] now the next thing when I'm talking about specifically about um the trial release data these are the kind of deflators that we have used in calculating this ISP wholesale trade service which is available only at the wholesale level then I'm going to use the deflator related to wholesale price index when I'm talking about these services basically these are retail services right these are ultimately these services are provided to the end retail consumer in that case I'm going to use CPI type right so these are the deflators that I'm going to use here okay so I hope we have been able to understand the meaning of the entire index all all the things related to the index and what is the first what are the first trial release values finaliz maybe they're going to expand the sectors also they are going to come with more refined data so we are going to take a look at that Okay, now let's move to the questions.

[00:22:17]So this is the first question that we have.

[00:22:27]So MOSBI is introducing the index of services production from July 26.

[00:22:34]The index of services production has dash as its base year and is compiled using dash base year or basically method for assignment of weights.

[00:22:52]Yes. So the base here is 24 25 C is the correct answer here. Gaitri Lalita Gulfaman Ansari Vandana Ammon Yes C is the correct answer here we just read this up next service sectors include and which one is my base year right so these kind of questions are important they remain important CPI base or understanding of these indexes become important for us.

[00:23:32]Okay, let me tell me the answer for the second question. The first trial ISP released covers dash subsectors with dash as the base year.

[00:23:44]Yes, B is the correct answer here. We are covering 19 subsectors with 2425 as the base year.

[00:23:53]Okay, correct. Moving on to the last question they question is only the last line is enough to answer this question right you are going to receive these kind of questions paragraph and that paragraph might not be actually required to answer this question so question which of the following service sectors recorded the highest growth in the first trial of ISP for April 2026 answer accommodation and food services.

[00:24:28]Maybe we can assume that a lot of people are taking a lot of trips, right? We see that our economy is moving a lot towards um a state where people like to spend a lot on travel first of all and luxurious eating also fine.

[00:24:45]So maybe we can take a hint from there that accommodation and food services have recorded the highest growth in the services sector. Okay. Yes, D is the correct answer here.

[00:25:05]So these are the answers for the questions that we have just discussed.

[00:25:08]You'll be able to find the PDF of the session in our telegram channel. Right.

[00:25:12]So this brings us to the end of the session. I hope you enjoyed the session.

[00:25:16]You were able to understand everything that we have covered in the session so far. If you have any doubts, concerns, feedback, you can tell me in the comment section. Apart from that, I would like to tell you for all the 27 students who want to start the preparation with the live batch, our 27 batch is already running live. It started a month ago, right? So if you want to start your preparation with the live batch um you can check out our batch in from the link in the description.

[00:25:48]Now these are the homework questions that I'm giving to you guys. Right? This is the part of the re revision series that we do. So you have to tell me the answer of these specific questions in the comment section. Right? And we're going to discuss the answers in the next class. Right? All right. Thank you so much everyone for attending the session