Project Cost Index bucks decline in September

After falling for five months, project cost index, as measured by ERIL Cost of Project Inputs, increased in September, though the index value was less than that in July. While this is welcome as weak project cost index mirrored feeble demand side from project developers, we have to wait for data for some more months to see whether the project cost index remains in the positive growth zone. Notwithstanding a nominal increase in September, the project cost index showed 1.9 per cent decline over H1, against 0.5 per cent increase in the similar period a year ago. Cement prices & basic metal prices were ruling noticeably lower over H1, even as the WPI for automobile was running a little higher. The ERIL Index of Cost of Project Inputs measures project cost index in terms of WPI of project implementation-related material inputs.

Capital goods production increased 7.4 per cent during April-August. Among the other material inputs in project execution, cement production increased 1.8 per cent and alloy, non-alloy steel production stagnated during this period. Machinery export declined by 4.1 per cent, whereas its import was up by 4.5 per cent during April-August.

Trends during September
The wholesale price index for non-metallic mineral products rose by 0.8 per cent during September following 2 per cent increase in price of grey cement and one per cent each in polished granite and slag cement. However, the price of marbles declined by 6 per cent.

The combined WPI for basic metals, alloys & metal products was up by 0.5 per cent due to higher price of rounds and wire rods (3 per cent each), pencil ingots, sheets and plates (2 per cent each) and gold & gold ornaments, billets, pig iron, steel castings, iron castings, joist & beams, CRC, rebars and angles (1 per cent each). However, the price of steel structures dropped 4 per cent, zinc 3 per cent and ferro chrome, iron & steel wire, steel rods, ferro manganese, GP/GC sheets, brass, copper / copper ingots and steel: pipes & tubes 1 per cent each.

The aggregate WPI for transport, equipment & parts climbed 0.1 per cent due to higher price of railway brake gear (1 per cent). However, the price of railway axle & wheel declined 2 per cent and auto rickshaw/tempo/matador one per cent.

In machinery & machine tools, WPI of electric motors increased 3.5 per cent and electric plugs, sockets, etc 5.2 per cent, whereas the drilling machines in machine tools recorded 2.3 per cent price reduction.