India's Economic Growth and Energy Outlook
FY 2022-23 was a year of economic growth for India. India is on track to become the world’s third-largest economy by 2027 basis global trends and key investments in infrastructure space. The industry witnessed robust logistics indicators such as steady growth in rail freight, container traffic in 2022 and strong recovery registered in automobile sales, specifically in passenger vehicles, tractors and 3-wheelers. The Agriculture sector also continued to show resilience, posting a strong 3.6% growth for the 5th straight year. IIP is showing a consistent upward trend with steel consumption, cement production and other underlying metrics showing holistic growth.
India registered a growth of 4.8 % in the total Petroleum Oil and Lubricants (POL) production during FY 2022-23 over the previous year. The consumption of petroleum products during April-Mar 2023 with a volume of 222.3 MMT reported a growth of 10.2% compared to the volume of 201.7 MMT during the same period of the previous year. This growth was led by 13.4% growth in MS, 12% in HSD & 47.1% in ATF consumption besides FO/LSHS, Petcoke, LPG and others during the period. With this growth, demand has surpassed pre-pandemic levels of FY 2019-20.
The global Oil and Gas industry witnessed high volatility in crude oil and finished product prices in FY 2022-23. India imports a significant portion of its crude oil requirements. Therefore, the prices of petrol and diesel in the country are linked to their respective prices in the international market. However, to insulate Indian consumers from the impact of high volatility in the international market and manage inflation, prices of petrol and diesel were kept relatively stable in India despite record-high international prices. This created stress on the profitability of domestic marketing of petroleum products.
While recent geopolitical uncertainty remains, the impact of recent upsurge in COVID-19 has not led to any restrictions and does not have a significant impact on Indian economy. The government’s thrust on capital expenditure, the automobile industry and oil demand are expected to grow further in FY 2023-24. India’s favourable demographic helps drive domestic consumption and decouple from the global economy. India’s GDP growth outlook for FY 2023-24, as per IMF, is among the highest for large nations, with the country’s growth slated to be 5.9%.
