Project Cost Index sees increase

Average project cost, as measured by the ERIL Index of Cost of Project Inputs, increased for the second month in February, ending decline of the previous two months. Project cost escalation on y-o-y basis, however, eased to 0.3 per cent, from 0.7 per cent in the preceding month and 2 per cent during this month a year ago. WPI-based inflation for all commodities went deeper in the red, after over five years of positive escalation. The combined WPI for manufactured products that sets the tone for project investment increased 1 per cent annually.

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

Capital goods production increased by 5.7 per cent during April-January 2014-15. Among the other material inputs in project execution, cement production increased 7.1 per cent. Alloy and non-alloy steel production was up by 1.6 per cent during this period. Machinery export increased 15 per cent, whereas their import was up by 2 per cent.

Trends during February
Wholesale price index for non-metallic mineral products rose by 2.2 per cent during February due to higher price of bricks and tiles (5 per cent), grey cement (3 per cent), marbles (2 per cent) and slag cement (1 per cent).

WPI for basic metals, alloys and metal products declined by 0.7 per cent following 4 per cent decline in price of iron castings, 2 per cent each in GP/GC sheets, sponge iron, angles, HRC, wire rods and plates, and 1 per cent each in sheets, rounds, pencil ingots, pig iron, billets, iron and steel wires, melting scrap, ferrochrome, rebars, aluminium, ferromanganese, steel, and joists and beams. However, the price of silver and gold and gold ornaments increased by 2 per cent, and pipes, tubes, rods and strips, nuts, bolts, screws and washers, ferrosilicon and brass 1 per cent.

WPI for machinery and machine tool rose by 0.1 per cent due to higher price of chemical plant equipment (2 per cent) and electrical pumps, ball/roller bearing, electric switchgears, engines, communication equipment, TV sets, pump and assembly and fluorescent tubes (1 per cent each).

WPI for transport equipment and parts rose by 0.2 per cent due to higher price of auto rickshaws, tempos and matadors, railway axles and wheels and parts of ships and boats etc. (1 per cent each).  However, the price of railway brake gear fell 2 per cent.