India's monthly diesel consumption continued to decline for the second straight month in August, according to preliminary industry data, signalling lower industrial activity. Diesel consumption accounts for 40 per cent of overall refined fuel sales in India and is one of the key parameters linked to overall economic growth. Asia's third largest economy shrank by a record 23.9 per cent in June quarter. Some private economists forecast a contraction of nearly 10 per cent in 2020-21, the worst performance since India won independence from British colonial rule in 1947.
State-refiners sold 4.26 million tonnes of diesel in August, a drop of 13 per cent from July and a 22.3 per cent fall from a year earlier, data compiled by Indian Oil Corp (IOC) showed. State companies IOC, Hindustan Petroleum Corp and Bharat Petroleum, own about 90 per cent of India's retail fuel outlets.
Falling local sales and subdued refining margins have forced refiners to curtail crude processing and undertake maintenance turnarounds of units during July.
Local fuel demand had gathered pace from May when India, the world's third-biggest oil importer and consumer, partly eased lockdowns to bolster its sagging economy.
Monthly growth however has softened since July, as a spike in domestic coronavirus infections has led to renewed lockdowns. Also, floods caused by rains have displaced and affected millions of people in some states and hit industrial and construction activity in the country.
India has not yet published industrial output data for August.
State retailers sold 0.4 per cent more liquefied petroleum gas in August from July at about 2.29 million tonnes and posted a decline of 4.1 per cent from a year ago.
Jet fuel sales in July rose 8.3 per cent from July to about 240,000, but fell 61.9 per cent from a year ago as curbs on air travel continued.