Giving hopes of some revival in project execution, the composite project cost index as measured by the ERIL Index of Cost of Project Inputs inched up for the second month in June, after a decline in April and a gradual rise in the previous nine months. Also, the final combined project outlay indices, made available after two months of provisional estimates, have tended to be higher (relative to provisional numbers).

The y-o-y increase in the project cost index worked out to 2.4 per cent in June, against 0.4 per cent over the corresponding period a year ago. Production of capital goods was up by 9 per cent in April-May, against 2 per cent decline in the year-ago period. Production of cement increased 7.7 per cent during April-May, twice the measure a year ago. Alloy and non-alloy steel output, however, stagnated (16 per cent increase a year ago). The WPI for manufactured products, which conceptually sets the stage for project investment, increased annually 3.6 per cent in June, against around 2.8 per cent a year ago.

Computed by Economic Research India Pvt. Ltd, the ERIL Index measures project cost escalation in terms of WPI of material inputs relevant in project construction

Trends in June
The aggregate wholesale price index (WPI) for non-metallic mineral products declined by 0.5 per cent during June due to 4 per cent decline in price of marbles and polished granite, and 1 per cent in grey cement. However, the price of bricks and tiles moved up 1 per cent.

The combined WPI for basic metals, alloys and metal products rose 0.1 per cent due to higher price of steel (4 per cent), ferromanganese (3 per cent) and ferrochrome, sheets, joists and beams, iron and steel wires, wire rods, angles, aluminium and steel castings (1 per cent each). However, the price of melting scrap declined 2 per cent and silver and gold and gold ornaments 1 per cent each.

The total WPI for machinery and machine tools increased 0.4 per cent due to higher price of computers (6 per cent), sprinklers (5 per cent), ball/roller bearings, fans and PVC insulated cable (4 per cent each), grinding/wet coffee machinery and harvesters (2 per cent each), and fibre optic cables and boilers and accessories (1 per cent each). However, the price of insulators (2 per cent) and batteries, electric switchgears and electrical pumps declined 1 per cent.

ERIL Index of Cost of Project Inputs: June 2014
Wholesale Price Index: 2004-05=100
Index Y-o-Y Increase (%) Increase Since March (%)
2014/13 2013/12 2014 2013
Non-metallic Mineral Products 167.3 11.4 3.2 -0.1 0.1
  Structural clay products 185.4 -4.2 5.2 0.5 1.6
  Cement & Lime 163.1 -4.5 1.9 -0.6 -0.9
Basic Metals, Alloys & Metal Products 167.1 2.8 -2.6 -0.3 -1.4
  Ferrous Metals 157.4 2.4 -2.7 -0.3 -0.6
  Non-ferrous Metals 167.3 3.1 1.4 0.5 0.4
Machinery & Machine Tools 133.8 2.4 2.3 0.5 1.0
  Industrial Machinery 152.5 2.1 2.9 0.5 1.2
  Construction Machinery 141.2 3.0 0.9 2.7 0.3
  Air-conditioners & Refrigerators 120.3 5.5 2.5 0.8 0.3
  Non-electrical Machinery 124.5 1.3 0.2 0.1 0.2
  Electrical Machinery & Batteries 138.2 1.9 2.6 -0.1 1.1
  Electrical accessories, Wires & Cables 152.6 1.7 4.8 0.7 7.2
Transport Equipment & Parts 135.8 2.3 3.6 0.0 0.5
  Automotives 135.1 2.2 3.9 0.0 0.4
  Auto Parts 136.2 2.6 2.5 0.1 1.1
Composite ERIL Index for Project Inputs 150.3 2.4 0.4 0.0 -0.3
Overall WPI 182.6 5.4 5.2 1.3 1.8

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