India, like most other developing nations in the world, is heavily dependent on diesel. The cheap fuel is used by an assortment of industries and sectors.
Diesel is often considered one of the indicators for measuring the amount of economic activity in the country. And going by the current trend of diesel sales in India, chances of quicker economic recovery looks bleak.
According to a report published in Bloomberg, diesel sales fell sharply in India last month due to reimposition of a new wave of lockdowns in high-risk areas.
Diesel sales at the country’s three biggest fuel retailers dropped 13 per cent in July and down over 20 per cent on a year-on-year basis.
While there was a rebound in sales due to easing of lockdowns in May and June, diesel sales again fell in July as restrictions were reimposed in some states.
The drop in diesel prices is worrisome for India as it is an indication that economic activity in India continues to be impacted by the local lockdowns. The recent hikes fuel taxes in the country has also impacted sales, according to the Bloomberg report.
Meanwhile, the flood situation in Assam and Bihar have also led to lower diesel demand across the country.
Most oil marketing companies believe that sales activity is unlikely to bounce back to normal in the near future, especially if coronavirus cases keep surging.
Indian Oil Chairman Shrikant Madhav Vaidya told the publication that the number of strict local lockdowns that states are announcing is taking a toll on demand.
“One thing is sure, we aren’t going back to the normal times at least in the near future,” he said.
Source – India Today