It’s set to be a slow crawl back to pre-virus levels for Indian energy demand with diesel, the most-used fuel, holding back the recovery. While demand for diesel, which accounts for around 40 per cent of Indian fuel use in a normal year, rebounded quickly after the the world’s biggest lockdown was imposed in March, the recovery has since slowed. The annual growth rate for diesel consumption won’t get back to pre-virus levels until the year ended March 2022, said Mukesh Kumar Surana, chairman of Hindustan Petroleum Corp. Used in factories, construction and agriculture as well as powering the truck and bus fleets, diesel is a bellwether of industrial activity in India and its tepid recovery reflects an economy still struggling to shake off the crippling effects of the pandemic. Gasoline demand, by contrast, is being buoyed by people opting to use private cars and motorcycles to avoid being exposed to Covid-19.
Union Finance Minister Nirmala Sitharaman Indian Finance Minister Nirmala Sitharaman’s promise of delivering a budget like no other on Monday stoked hopes of a much-needed spending boost. But if the past is any guide, the reality may disappoint. The government has missed its total spending targets in the past two years, or even scaled them down, and has failed to meet goals for some of its flagship development programs, a review of budget documents show. While increasing public expenditure is key to revive the economy from the pandemic-induced slump, falling tax revenues mean Sitharaman will have thin resources. Borrowing has already risen to a record 13.1 trillion rupees (about $180 billion) in the current financial year to March, widening the fiscal deficit and putting its sovereign rating under scrutiny.
Any new taxes in India’s budget would impede a nascent economic recovery, economists said, amid speculation that Finance Minister Nirmala Sitharaman could impose an additional levy on the wealthy to fund the government’s pandemic-related expenditure. A so-called Covid cess shouldn’t be announced because the economy is still normalising after a strict and vast lockdown, Sonal Varma, an economist at Nomura Holdings, said on Thursday in a Q&A with Bloomberg. Abhishek Gupta of Bloomberg Economics warned that such a levy risks hastening capital outflows. The trend over the last few years has already raised the total taxes for high income earners to 42.7 per cent, including cess and surcharges, from around 30 per cent,” Gupta said during the Q&A. “A further rise could lower their incentive to invest and earn in India.