National Highways Construction Cost Index Released

2019 ias preliminary exam test series

National Highways Authority of India (NHAI) has released National Highways Construction Cost Index (NHCCI) up to September 2015.

This has been compiled based on information received from the source agencies viz. concessionaire / contractors.

The index has been uploaded on NHAI website. Issues relating to choice of base period, selection of item basket, derivation of weighting diagram, collection of data, method of calculation of NHCCI and comparison with WPI have been uploaded on NHAI website as “Methodology for NHCCI”.

The indices are released experimentally for inviting comments from users / experts / stakeholders on replacing WPI with NHCCI in escalation clauses of highways construction cost.

current affairsFigures are provisional subject to revision with availability of further additional information and have no legal sanctity attached as yet.

However, it is a step towards finalization of indices after receiving the feedback / comments.

The National Highways Construction Cost Index (NHCCI), released by NHAI takes into account 60 items clubbed into three categories—material, labour and equipment—and arrives at a composite index figure.

The reference date for the index has been taken as April 2013.

The aim of the index, which NHAI clarified, is still tentative pending consultation, improvements and more data, is to eventually replace the Wholesale Price Index (WPI) when it comes to measuring the escalation of prices to do with road construction.

The WPI is a national index which covers a number of representative items. Although it is robust at an aggregate level and at the group levels, it is not reliable at item level due to small number of price quotations. It doesn’t include all the items as required by the highways projects of India.

Many of the critical components of a highways project are not included in the WPI as they may not be important in the overall economy.

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