Diesel sale dips in UP, impacts govt revenue too

A countrywide economic slump appears to have put the brakes on growth in the sale of diesel in Uttar Pradesh, impacting the government’s revenue as well.

However, consumption of petrol has been found to be normal.

Trucks and farmers are the primary consumers of diesel in UP, like in the rest of the country.

The sale of diesel during the current financial year is either registering a negative growth over the corresponding period of the previous year or showing only marginal growth.

“The sale of diesel has declined all over the country and not just in UP,” Uttar Pradesh Petroleum Traders Association’s interim president Ashwani Attrish said. He attributed the trend to the prevailing economic slowdown in the country resulting in a cut in industrial production.

“Around 70-80% diesel is consumed by trucks. Since industrial production is down, truck operations are down as well, reducing the demand for diesel,” he said.

A report available with the state government here said a total 6,966,490 kilo liter (KL) diesel was sold in UP between April and November this year against 6,807,436 KL sold in the corresponding period of 2018-19. The sale growth is merely 2.34% which, according to sources, should be around 10% in normal circumstances.

The diesel sale registered a negative growth in April when the demand fell by 8.27%. The negative growth was found in October and November also when the sale dropped by 0.02% and 8.83%, respectively. The highest positive growth was recorded at 7.61% in May.

Decline in the volume of diesel was reflected in the government’s revenue collection also. The same report shows that against Rs 6449.27 crore (Rs 64.449 billion) tax that the government collected from diesel between April and November 2018-2019, the tax collection during the same period in 2019-20 dipped to Rs 5990.07 crore (Rs 59.90 billion) which is 7.12% less.

Barring November when tax collection from diesel showed a nominal but positive growth of 0.37%, the revenue collection from diesel showed a negative growth in all other months between April and November. The marginal revenue growth in November, according to sources, was due to a hike in the tax rate by the government.

However, this is not the first time that the sale of diesel has fallen in the state.

Attrish said the same situation also prevailed in 2008 and 2011 when the industrial production was equally down. “There is a direct correlation between economic activities and diesel consumption,” he said.

The sale of petrol, on the other hand, was normal between April and November. A total of 3012648 KL petrol was sold during this period when the average growth was 10.76%. The lowest growth of petrol sale in UP was 3% in April and the highest was 15.45% in July.