India’s 2019/20 fuel demand growth worst in over two decades

India’s annual fuel demand grew 0.2 per cent in 2019/20, its worst growth rate in over two decades, dragged down by a hefty 17.8 per cent decline in local consumption in March as steps taken to prevent the spread of COVID-19 dented transport fuel sales.

Consumption of refined fuels, a proxy for oil demand, totalled 16.08 million tonnes in March, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Monday.

Falling refined fuels sales in March points to sluggish industrial activity in Asia’s third largest economy, which according to some analysts is forecast to grow at 1.5-2 per cent in 2020/21, its lowest in decades.

A Reuters poll of economists showed it is expected to have expanded at its slowest pace in eight years in the first quarter and would slow further this quarter.

Indian Prime Minister Narendra Modi will address the nation on Tuesday, the last day of the current 21-day lockdown, and is widely expected to extend the closure except the start of some essential manufacturing units.

Due to restrictions on movement and travel advisories, India’s consumption of diesel, petrol and aviation turbine declined massively during March.

Consumption of diesel, which normally accounts for two-fifths of overall refined fuel consumption, declined 24.2 per cent in March from a year earlier, its deepest decline since April 1998. PPAC do not provide monthly growth numbers for before April 1998. Sales of gasoline, or petrol, used by automobiles fell by 16.4 per cent from a year earlier, its worst slide since March 1999, the data showed.