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Published: Apr 12, 2023
Updated: Apr 12, 2023

India's Fuel Consumption Hits Record High in March Due to Economic Growth and Infrastructure Development

India's fuel consumption has surged to a record high in March, driven by robust economic activity and infrastructure development in the country. According to data from the Indian Oil Ministry's Petroleum Planning and Analysis Cell, fuel consumption, a proxy for oil demand, increased by 5% from a year earlier to 4.83 million barrels per day, the highest level recorded in data going back to 1998.

Bitumen Drives Growth in March

Bitumen, a material used for building roads, was the primary source of growth in March, with sales jumping by 16.5% from February. Meanwhile, transportation fuels such as diesel and gasoline had been the drivers in previous months. Jet fuel sales also rose by more than 10.4% to 0.69 million tonnes.

Gasoline and LPG Sales

On an annual basis, sales of gasoline, or petrol, rose by 6.8% to 3.1 million tonnes in March, while cooking gas, or liquefied petroleum gas (LPG), sales declined by 2.7% to 2.41 million tonnes.

Government's Capital Expenditure Allocation

Independent oil market analyst Sugandha Sachdeva suggested that the overall jump in consumption could have been driven by the government's increased capital expenditure allocation. With the upcoming election year, there is a significant demand for construction and infrastructure, leading to more demand for oil products.

Exports to Europe and Travel Revival

Increased oil product exports to Europe amid Western sanctions on Russia and a travel revival boosting jet fuel demand could be additional drivers, Sachdeva added.

Investments in Airports and Aircraft

In March, India announced plans to invest billions of dollars in airports, aircraft, and recruitment, as the world's fastest-growing economy seeks to meet booming air travel demand.

Reflects strong growth in infrastructure projects and overall economic development

India's record-high fuel consumption in March is a reflection of the country's robust economic growth and infrastructure development. With increased capital expenditure allocation, rising demand for construction and infrastructure, and the travel revival, India's oil demand is likely to continue growing in the coming months