NEW DELHI: Despite a sharp rise in retail fuel costs due to a high taxation and a rebound in crude oil prices, India’s petroleum product demand is expected to rise by 10 per cent during the next financial year (2021-22). According to the oil ministry’s Petroleum Planning and Analysis Cell, a reflating economy driving petrol and diesel sales will likely result in petroleum product consumption breaching 215.24 million tonnes in FY22 a six-year high.
The government’s revised estimates forecast that the current year’s fuel consumption is likely to be just 195.94 million tonnes, an 8.5 per cent fall from the previous year’s 214.12 million tonnes, since the lockdown last summer resulted in large scale demand destruction. The estimated rise in demand next year, while an indicator of an expected increase in economic activity, is also likely to result in inflationary pressure on prices of goods across the board unless fuel taxes are reduced or crude prices fall.
Analysts and industry executives already say that the high retail cost of auto fuels such as petrol and diesel are having an impact on production and supply costs for a variety of goods. According to the PPAC’s
figures, the next fiscal year is expected to see petrol demand climb to 31.3 million tonnes, diesel sales to 83.67 million tonnes, Naphtha sales to 15.25 million tonnes, and bitumen sales, used in road construction, to 7.1 million tonnes. This fiscal, cooking gas LPG demand is seen expanding 4.8 per cent to 29 million tonnes, while jet fuel (ATF) consumption is seen rising 74 per cent.