Friday, April 13, 2012

Consumption of petroleum products in India

                                        Source: Business Standard  (* For the period from April to February)

Petroleum products are a perennial headache for the government. Some times because of the price swings in international crude oil prices. Some times because of rise in domestic consumption of these finite resources. This is because petroleum products gulp down a significant chunk of subsidies. So their prices and consumption have a strong binding on government finances. The latest news is that diesel consumption for the financial year 2011-12 (FY12) is estimated to have grown by a whopping 11.9% year-on-year (YoY). This is likely to have caused growth in consumption of petroleum products by 4.9% YoY. It is noteworthy that this is the highest growth in the last four years. High subsidy makes diesel cheaper in comparison to its competing fuels. Between FY07 and FY12, the share of diesel in the petroleum products basket has grown from 35.5% to more than 43%. It goes without saying that such growth in consumption is giving jitters to the government.  

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