Reflecting subdued project execution, project cost index, as measured by the ERIL Index of Cost of Project Inputs, declined, though nominally, over fiscal 2015 (on point-over-point basis), against an uninspiring 2.1 per cent increase in the preceding year and 2.4 per cent two years ago. WPI-based inflation for all commodities also declined over the fiscal, the first decline after several years, and so did the combined WPI for manufactured products that sets the tone for project investment.

ERIL Index measures project cost escalation in terms of WPI of material inputs relevant in project construction.

Capital goods production increased 6 per cent during April-February 2014-15. Among the other material inputs in project execution, cement production increased by 6.7 per cent, and alloy and non-alloy steel production 1.1 per cent during this period. Machinery export increased by 14 per cent, whereas their import was up by 2 per cent during April-February 2014-15.

Trends during March
WPI for non-metallic mineral products rose by 0.7 per cent during the month due to higher price of grey cement and glass bottles and bottleware (2 per cent each). However, the price of marbles declined by 7 per cent and bricks and tiles and railway sleeper by 1 per cent each.

WPI for basic metals, alloys and metal products declined by 0.7 per cent following 4 per cent price reduction in scrap, 3 per cent in pig iron and plates, 2 per cent each in sponge iron, GP/GC sheets, CRC, ferrosilicon, rounds, and pipes, tubes, rods and strips, and 1 per cent each in wire rods, aluminium, HRC, gold and gold ornaments, angles, joists and beams, billets, silver and ferrochrome. However, the price of steel castings and sheets (1 per cent each) moved up by 1 per cent.

WPI for transport equipment and parts declined by 0.1 per cent due to 2 per cent price reduction in motorcycles, scooters and mopeds (2 per cent).

Trends during FY15
Structural clay products, particularly bricks and tiles and marbles (4.8 per cent); grey cement (9 per cent); aluminium (3 per cent), particularly aluminium casting and wires; loaders (15 per cent) in construction equipment; electrical equipment and wires (4.9 per cent); PVC insulated cables (12 per cent), UPS/stabilizers (7 per cent), computers (6 per cent), and fuel injection equipment (in transport equipment and parts) were among the capital goods recording appreciable price hikes; pig iron and billets (10 per cent each); and steel: flat and long (5-7 per cent) were among the merchandise that showed marked declines in prices.

ERIL INDEX OF COST OF PROJECT INPUTS: MARCH 2015
Wholesale Price Index: 2004-05=100
Index
Y-o-Y Increase (%)
Increase Since March (%)
2015/14
2014/13
2014
2013
Non-metallic mineral
products
177.9
6.2
0.4
6.2
0.4
Structural clay products
193.3
4.8
10.0
4.8
10.0
Cement & lime
177.7
8.3
-4.8
8.3
-4.8
Basic metals, alloys
& metal products
162.4
-3.1
1.7
-3.1
1.7
Ferrous metals
151.4
-4.1
2.0
-4.1
2.0
Non-ferrous metals
167.9
0.9
3.0
0.9
3.0
Machinery &
machine tools
135.3
1.6
2.9
1.6
2.9
Industrial machinery
153.2
1.0
2.8
1.0
2.8
Construction machinery
141.5
2.9
0.6
2.9
0.6
Air-conditioners
& refrigerators
120.6
1.0
5.0
1.0
5.0
Non-electrical machinery
127.8
2.7
1.1
2.7
1.5
Electrical machinery
& batteries
138.3
-0.1
3.2
-0.1
3.2
Electrical accessories,
wires & cables
158.9
4.9
4.6
4.9
8.2
Transport equipment
& parts
136.8
0.7
2.7
0.7
2.7
Automotives
135.6
0.4
2.6
0.4
2.6
Auto parts
139.8
2.7
3.7
2.7
3.7
Composite ERIL Index
for project inputs
150.2
-0.1
2.1
-0.1
2.1
Overall WPI
176.1
-2.3
6.0
-2.3
6.0

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