India’s fuel demand fell 9.1 percent in the fiscal year ended March 31, the first in more than two decades. This was a strict lockdown to contain the spread of pandemic economic activity.

India consumed 194.63 million tons of petroleum products in the 2020-21 period, compared to 214.12 million tons of demand in the previous year. This is based on the latest data released by the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Oil.

This is the first time since 1998-1999, the most historic year for which government data is available that fuel economy has decreased.

The decline in demand was led by diesel, the most consumed fuel in the country. Diesel consumption fell by 12 percent to 72.72 million tons, while gasoline demand fell by 6.7 percent to 27.95 million tons.

The government imposed a nationwide lockdown in late March last year that closed factories and businesses, halted most road transport, canceled flights and stopped trains. The ban was gradually lifted from June.

GDP is expected to contract 7 to 8 percent in 2020-21 after economic activity showed signs of recovery in the final quarter of 2020.

However, a second wave of COVID-19 infections, despite an increasing introduction of vaccinations with re-bans in some states, threatens to hit the looming recovery.

Domestic cooking gas LPG was the only retail fuel to see growth. Consumption increased by 4.7 percent from 26.33 million tons in the period 2019-20 to 27.59 million tons. This on the back of free cylinders the government gave to the poor as Covid relief.

Since the airlines remained closed for most of the years and had not yet fully resumed operations, the consumption of aviation fuel (ATF) fell by 53.6 percent to 3.7 million tons.

While naphtha sales were virtually unchanged at 14.2 million tons, bitumen (used in road construction) rose 6 percent to 7.11 million tons as the government stepped up construction to get the economy going again.

Fuel consumption was cut in half in April last year after the lockdown was imposed. It started to recover after lockdown restrictions were relaxed.

Gasoline sales returned to pre-COVID-19 levels in September last year, and the festival season helped boost diesel demand in the months that followed.

In March, fuel demand rose 18 percent to 18.77 million tons, with diesel consumption increasing by 27 percent and gasoline consumption by 25.7 percent. This is due to the small base effect from March 2020 when the restrictions went into effect.