India's petroleum consumption up by 10% in FY23, driven by surge in Petrol and Diesel usage

India's consumption of petroleum products experienced a 10% growth in the fiscal year 2022-23, as compared to the preceding financial year. The surge propelled the consumption volume to 223 million tonnes, disclosed Rameswar Teli, the Minister of State for Petroleum & Natural Gas.

Teli, addressing the Rajya Sabha through a written response, attributed the surge to a substantial 13% spike in petrol consumption and 12% upswing in diesel usage.

The driving forces behind this surge were multifaceted – a thriving economy, burgeoning industrialization, rapid urbanization, infrastructural expansion, and an escalating number of vehicle sales.

To bolster consumption and provide a fillip to the economy, the central government slashed central excise duty by ₹13 per litre on petrol and ₹16 per litre on diesel in November 2021 and May 2022, respectively.

This reduction was entirely transmitted to consumers, leading to a marked decline in retail fuel prices. In a similar vein, many states and union territories followed suit by reducing Value Added Tax (VAT) rates on both petrol and diesel.

The government launched the National Biofuel Policy in 2018, aimed at fostering the adoption of greener alternatives like ethanol, bio-diesel, and bio-CNG. The results are tangible, with ethanol blending in petrol during the Ethanol Supply Year (ESY) 2021-22 resulting in an estimated impact of over ₹22,600 crore on the import bill for crude oil and petroleum products.