Reduced excise taxes, postponed monsoon increased India's fuel demand in June

14 Jul 2022 , 11:05 AM

Strong demand for fuels was seen in June as a result of the Central Government’s cut in excise duty on gasoline and diesel and the postponed arrival of the monsoon.

In order to give customers much-needed respite, the Center cut excise duty on gasoline and diesel on May 21 by Rs8 per litre and Rs6 per litre, respectively. As a result, the exchequer lost an additional Rs1 trillion in revenue.

India’s demand for oil products increased by 704,000 barrels per day, or 16.3% annually, in June, according to S&P Worldwide Commodity Insights, a global energy, and commodities-related service provider.

Despite a tumultuous global market, retail fuel prices have remained stable, indicating that oil marketing organizations may have undercharged for transport fuels sold in the retail market, according to the statement.

It thinks that the recent implementation of an export tax on fuels will aid the central government in controlling its growing budget imbalance that resulted from the reduction in excise taxes.

In an effort to address the nation’s energy needs, the Centre on July 1 levied a special additional excise duty of Rs6 per litre on gasoline and Rs13 per litre on diesel on exports.

The (RBI) also abandoned its “accommodative” policy position, and the government is now primarily concerned with containing inflation. According to Platts Analytics, India’s GDP would expand by 6.8% in 2022 and then 6.3% in 2023 on a calendar-year basis.

It predicts that India’s oil demand will decline by 140,000 barrels per day on a quarterly basis during the quarter of July through September due to the ongoing monsoon season, before increasing during the quarter of October through December due to festivals and holiday seasons.