India’s Fuel Demand Rises In October, Giving Hopes For Better And Early Economic Recovery

GST (Goods and Services Tax) collections, power demand, PMI, etc all are indicating increased economic activity and Covid-19 cases are also coming down to a point where demand is coming back to normalcy.

Fuel being filled in a car (Rep Photo / PTI)

Post pandemic induced lockdown, India registered a year-on-year increase in fuel demand for the first time in eight months. The increased consumption of fuel last month is being attributed to increased economic activity during the seasonally active festive quarter. The fuel consumption growth is not just to project how India enjoyed during the festivals, but a sign of economic recovery. According to the data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas, the Consumption of refined fuels, which is also a proxy for oil demand, jumped 2.5 per cent in October from the prior year to 17.78 million tonnes and nearly 15 per cent higher in comparison to the previous month. Vice-President of Indian Credit Rating Agency (ICRA) K Ravichandran, while mentioning the post-Covid-19 economic normalcy told the media, “GST (Goods and Services Tax) collections, power demand, PMI, etc all are indicating increased economic activity and Covid-19 cases are also coming down to a point where demand is coming back to normalcy.” Ravichandran further explained that not just the festive quarter has attributed to the rise in higher fuel consumption, the rise in public transport has also contributed to higher fuel demand, and is expected to improve in the coming months. India, which rank second on the Covid-19 world tally with 8.8 million cases, saw a sharp decline in economic activities after the government-imposed lockdown, to contain the spread of the disease. With the number of cases declining, economic activity seems to be on the rise. Meanwhile, India’s dominant services industry also expanded for the first time in eight months in October as demand surged. It is worth mentioning, that diesel consumption, and climbed about 27 per cent on a month-to-month basis, one of the key parameters linked to economic growth which accounts for about 40 per cent of overall refined fuel sales in India, roles nearly 7.5 per cent to 6.99 tonnes on an annual basis. On the other hand, sales of petrol saw a rise 4.3 per cent from a year earlier to 2.65 million tonnes, and by 8.2 per cent from 2.45 million tonnes from September.