Project cost index resumes upturn in August

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Dr.M.S.Kapadia

ERIL Index of Cost of Project Inputs inched up during August, after straying into a decline in the preceding month; the solitary reduction over around 13-14 months. In another sign of upward movement in costs of project inputs, the final estimates of WPI of project investment-related material inputs have tended to be higher than those provisionally assessed. Nevertheless, the escalation in composite project cost index has remained subdued at 2.2 per cent y-o-y in August and 0.1 per cent in the first five months of the ongoing fiscal, as compared to 3.5 per cent and 3 per cent, respectively in aggregate WPI. Production of capital goods was up by 8.5 per cent in April-July. Production of cement increased 11 per cent, though alloy, non-alloy steel output stagnated at year level. 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 August

The total wholesale price index for non-metallic mineral products rose  0.8 per cent  during the month due to higher price of marbles (3 per cent) and grey cement and railway sleeper (2 per cent each).  However, the price of bricks & tiles declined by one per cent.

 

The aggregate WPI for machinery & machine tools rose 0.4 per cent due to higher price of PVC insulated cable (6 per cent), heat exchanger (4 per cent), grinding /wet coffee machinery and loader (2 per cent each) and conductor, insulators, electric switch gears, pump & pump assembly, electric switches and battery dry cells (1 per cent each).  However, the price of washing / laundry machines declined 3 per cent, ball/roller bearing and microwave oven 2 per cent each and fibre optic cable, material handling equipments and machine tools 1 per cent each.

 

The collective WPI for transport, equipment & parts rose nominally due to higher price of bi-cycles (2 per cent) and bus / mini bus / truck (1 per cent).

 

The combined WPI for basic metals, alloys & metal products declined by 0.2 per cent due to lower price of wire rods and pig iron (3 per cent each), melting scrap (2 per cent) and sponge iron, rounds, plates, steel rods, angles, pencil  ingots, CRC, gold & gold ornaments, joist & beams, fixtures and ferro chrome (1 per cent each).  However, the price of steel castings, ferro manganese and nuts/bolts/screw/ washers increased 2 per cent each and aluminium, silver and rebars one per cent each.

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