New Delhi: In one of the strongest and positive signs of a fast-recovering economy post-Covid-19, India expects to see the demand for petroleum rise by 10 percent in the next fiscal, 2021-22.
After recent reports on record collection on Goods and Services Tax (GST), this has come as a reassuring indication about a rebound in the Indian economy as the nation recoups the massive losses caused by the global pandemic, Covid-19.
An important factor for this optimism is the improved performance of the automobile sector after the gradual lifting of nationwide lockdown restrictions in 2020. The new trend for more commuters using personal vehicles instead of buses, trains, and other modes of public transport, is being seen to drive India’s demand for petrol, diesel, and compressed natural gas (CNG).
The expected demand for these fuels will reach a record 215.24 million tons until March 2022, according to estimates by the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas, media reported on Wednesday.
This increase demonstrates almost a 10 percent rebound from the current year (2020-21), which was hit very hard by the killer virus.
Due to lack of demand and loss of jobs in the world’s third-largest oil importer and consumer, India’s fuel consumption in 2020 had plunged by a whopping 70 percent in the wake of the world’s biggest and prolonged lockdown. The overall fuel demand in 2020-21 is expected to fall 8.5 percent.
The stringent measures enforced across India to control the spread of the pandemic led to a steep fall in crude processing and imports, which triggered a slump in international oil prices as well.
With the potential increase in demand, the Organization of Petroleum Exporting Countries (OPEC) is expected to discuss this week how much crude they would produce. India has urged them to increase oil production, according to media reports.
With an expected 11 percent rise in GDP in FY22, India is set to see strong demand for transport and industrial fuels. In particular, consumption of diesel, a key economic barometer and India’s most-used fuel, is likely to grow by over 13 percent.
Several far-reaching measures announced by the NDA government led by Prime Minister Narendra Modi during FY21 in a phased manner, helped the Indian economy pull itself out of recession in the last quarter of FY20 (October-December 2020). Among these steps was a boost in government spending and the reopening of an economy driven mainly by increased domestic consumption.
As a result, India became one of the few major economies to post growth in the closing three months of 2020.
Demand for aviation fuel, which suffered the biggest blow, is now estimated to grow more than 74 percent during FY22. But it will still remain a little lower than the pre-pandemic year (2019-20) as several countries are yet to reopen their air spaces to the pre-Covid-19 levels.
