Economy

India's fuel demand contracts 9.1 per cent in FY’21

PTI New Delhi | Updated on April 09, 2021

Prices of these three fuels have continued skyrocketing through February   -  SUDHAKARA JAIN

This is the first time the fuel consumption has shrunk in more than two decades

India's fuel demand contracted by a massive 9.1 per cent in the financial year ended March 31, 2021, the first in more than two decades, as a stringent lockdown imposed to curb the spread of the pandemic pummelled economic activity, government data showed on Friday.

India consumed 194.63 million tonnes of petroleum products in 2020-21 as compared with 214.12 million tonnes demand in the previous year, according to the latest data released by the oil ministry's Petroleum Planning and Analysis Cell (PPAC).

This the first time that the fuel consumption has contracted since 1998-99, the most historical year for which government data is available.

Domestic oil, gas output remained below pre-Covid levels in February

Petrol, diesel demand

The demand contraction was led by diesel, the most-consumed fuel in the country. Diesel consumption fell 12 per cent to 72.72 million tonnes while petrol demand shrank 6.7 per cent to 27.95 million tonnes.

The government imposed a nationwide lockdown at the end-March of last year, shutting down factories and businesses, halting most road transport, cancelling flights and stopping trains. The lockdown was lifted in stages beginning June last year.

The GDP is estimated to have contracted by 7-8 per cent in 2020-21 after economic activity showed signs of recovery in last quarter of 2020.

Fuel consumption dips for 2nd straight month in Feb

However, a second wave of Covid-19 infections despite a broadening vaccination roll-out, with renewed lockdowns implemented in some states, is threatening to hit the nascent recovery.

Petrol sales returned to pre-Covid-19 levels in September last year and festival seasons helped pull diesel demand up in the following months.

In March, fuel demand soared 18 per cent to 18.77 million tonnes with diesel consumption rising 27 per cent and petrol climbing 25.7 per cent. This is because of low base effect of March 2020 when restrictions came into effect

LPG consumption up

Domestic cooking gas LPG was the only retail fuel that posted growth, with consumption rising by 4.7 per cent to 27.59 million tonnes from 26.33 million tonnes in 2019-20. This on the back of free cylinders that the government gave to poor as Covid relief.

With airlines remaining shut for the most years and yet to resume full-scale operations, jet fuel (ATF) consumption fell 53.6 per cent to 3.7 million tonnes.

While naphtha sales were almost flat at 14.2 million tonnes, bitumen (used in road construction) rose 6 per cent to 7.11 million tonnes as the government stepped up construction activity to reflate the economy.

Published on April 09, 2021

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