India's fuel consumption contracts 9.1% in FY21; first since 1998-99

New Delhi: India’s fuel demand contracted by a massive 9.1% in the financial year ended March 31, 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 April 9.

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.

The demand contraction was led by diesel, the most-consumed fuel in the country. Diesel consumption fell 12% to 72.72 million tonnes while petrol demand shrank 6.7% 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, canceling flights and stopping trains. The lockdown was lifted in stages beginning June.

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

However, the 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.

Domestic cooking gas LPG was the only retail fuel that posted growth, with consumption rising by 4.7% 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% to 3.7 million tonnes.

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

Fuel consumption had halved in April last year following the imposition of the lockdown. It started to recover after the lockdown restrictions were eased.

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% to 18.77 million tonnes with diesel consumption rising 27% and petrol climbing 25.7%. This because of low base effect of March 2020 when restrictions came into effect.