In November 2008, the Indian oil products sales dropped on account of the global economic slowdown and low demand from both private and state-run companies.
As per the official figures, the sales of domestic oil products in India grew sluggishly at 2% in November 2008 against the same month a year ago, representing weak demand under faltering economy, as reported by REUTERS.
Domestic diesel sales flared up 8.6% to 4.5 Million Tonnes in November 2008 from the corresponding month last year, moderating as consumers started using other cheap alternatives like naphtha and fuel oil. India, the third largest oil product consumer in Asia, imported 31.7% lesser oil products in November 2008 over the same month previous year. Crude oil imports also climbed 7.8% against November 2007.
The demand for several industrial fuels slipped down in November 2008, giving a picture of the state of the economy but the crude imports scaled up on the back of high purchases by private refineries. For instance, Reliance Industries cut down naphtha intake for its petrochemical plants, leading to decline in sales of naphtha. Now the group has stepped up crude purchases as it is all set to start a refinery in western India.
Like China, the biggest challenge looming over India is meeting the growing domestic energy demand. The downtrend in the domestic demand for oil products during November 2008 was a result of fall in factory output, postponement of expansion plans by companies and laying off staff in the backdrop of slow export growth. All these factiors are accredited to weak global demand.
The central banks has slashed the interest rates several times since mid-October 2008, and the government has announced stimulus packages for sectors that are severely hit by the ongoing global financial crisis and rising borrowing costs in the domestic market.
According to a Research Analyst at RNCOS, “The sales of oil products in India plummeted during November 2008 because of slow economic growth. It becomes inevitable for the country to switch over to next generation fuels and increase dependence on renewable energy resources. On the other side, India is trying to maintain a constant supply of oil and understand the fact that its economy is vulnerable to supply disruptions.”
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