New Delhi: India has cut its forecast for fuel demand in the current fiscal year by nearly one percent to 146.9 million tonnes, the Petroleum Planning and Analysis Cell (PPAC) said in a report, because of a slowdown in economic activity.
The Indian economy, which grew at 8.5 percent in the year ended March 2011, is expected to grow less than 8 percent this fiscal year which ends on March 31, 2012.
The forecast is now up just 3.6 percent from the previous fiscal year's demand. In the year ending March 31, 2011, local fuels sales -- a proxy for oil demand in the country -- rose 2.9 percent on the year to 141.75 million tonnes.
PPAC had earlier projected India would consume 148.3 million tonnes of refined oil products this fiscal year.
"Actual consumption of petroleum products is rising at a lower rate" than previous projections, the report posted on the PPAC website said.
In the April-June period, India consumed 71.8 million tonnes of oil products compared with an estimate for 72.5 million tonnes, while fuel demand in July-September has been revised down to 75.1 million tonnes versus earlier projections of 75.8 million tonnes, it said.
India's downward revision echoes those of the International Energy Agency (IEA), which cut its global oil demand growth projection for 2011 by 50,000 barrels per day to 990,000 bpd on Oct. 12.
India's economy is showing signs of a slowdown although rates of growth are still well above European and U.S. levels, as the RBI tightens lending policy in an attempt to subdue inflation which is nearly in double digits.
Raw materials output -- including electricity and steel for industrial use -- rose only 2.3 percent in September from a year ago, slowing from August's 3.7 percent pace.
Car sales are also slowing and are now expected to grow just 2-4 percent this year, down from a previous forecast for a 10-12 percent increase from the Society of Indian Automobile Manufacturers.
The report added that diesel has once again started being used instead of fuel oil, because of lower prices, higher calorific value and cleaner burning properties.