India had announced a complete lockdown on public movement in March 2020 due to the coronavirus (COVID-19) pandemic, thereby witnessing a 17.8 per cent decline in demand for fuel in the country. A steep drop in demand towards the end of the financial year (FY) 2019-20 has resulted in just 0.2 per cent growth in FY’19-20, the lowest growth in over two decades.
Post today’s announcement by Narendra Modi, the Indian Prime Minister, the nationwide lockdown has been extended to 3 May. The effect of this month-long lockdown at the start of new fiscal might also reflect in the sales growth for FY’20-21. Falling refined fuels sales in March points to sluggish industrial activity in Asia’s third largest economy, which according to some analysts, is forecasted to grow at 1.5-2 per cent in 2020/21, the 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. A data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry revealed that the consumption of refined fuels, a proxy for oil demand, totalled 16.08 million tonnes in 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 did not provide monthly growth numbers prior to 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 revealed.
