After consumer spending fell by 3.7 per cent for the first time in four decades, now reports have surfaced saying that diesel demand in India has fell in October by 7.4 percent, marking its biggest monthly fall in about three years.
According to Economic Times, total demand for oil during the month was down by 1.4% from October of 2018. Analysts have said that the demand for diesel, which accounts for about 40% of the country’s oil requirement, appears to be crumbling due to a mix of economic slowdown, extended monsoon, sluggish vehicle sales, preference for petrol vehicles, increased availability of power, electrification of railways, and GST-induced efficiency in transport. The fuel’s demand had contracted 3.3% in September but had grown 1.1% in the six months to September.
Sale of petrol, which makes up about 15% of the total oil demand, rose 8.9% in October compared with 9.1% rise in the April-September period. Industry executives attribute strong petrol sales mainly to car buyers’ preference for petrol-powered vehicles. During the month, demand for liquefied petroleum gas (LPG), mainly used for cooking in India, jumped 14% while that of polluting petcoke went up 30%. India’s total oil demand had grown 1.4% in the first half of the current fiscal year, and was up 2.7% in the full year 2018-19.
Local sales of diesel, which accounts for about two-fifths of overall fuel consumption, slipped 7.4 per cent year-on-year to 6.51 million tonnes. The annual decline was the most since January 2017, according to data posted on the website of Petroleum Planning and Analysis Cell, as reported by Reuters.
A fall in auto sales over the last year in tandem with a shift by motorists to gasoline powered vehicles, has also contributed to the fall in diesel consumption. Sales of gasoline, or petrol, rose 8.9% in October from a year earlier, to 2.54 million tonnes. However, demand for diesel is expected to recover in the next six months as the longer-than-usual monsoon season that affected transportation and industry has ended, the chairman of top domestic refiner Indian Oil Corp said on Monday, reported Reuters.