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The Covid-19 pandemic is now bringing out the real impact it had on demand compression and economic activity in various sectors.

Fuel consumption, an important barometer of the health of an economy, had shown contraction for the first time in two decades falling by a big margin of over nine per cent in FY21 as pandemic related lockdowns curbed economic activity and reduced the movement of goods and services across the country.

According to oil ministry's Petroleum Planning and Analysis Cell (PPAC), country's total consumption off petroleum products fuel two 195 million tonne (mt) in 2020-21 as against 214 mt in previous financial year.

This is for the first time since 1998-99 that consumption of petroleum products have shrunk in the country indicating the extent of economic impact that's the pandemic is having in the country.

Interestingly, while FY21 numbers shows a sharp decline, in March India's fuel consumption rose to its highest since December 2019 growing by 18 per cent to close to about 19 mt.

For FY21, the decline in consumption has been led by diesel that remained affected throughout the year as slim economic activities resulted in lesser requirement of transport. Diesel consumption fell 12 per cent to 73 mt while petrol demand shrank 7 per cent to 28 mt.

Among petroleum products, only LPG consumption has grown as government the scope of using the cleaner fuel under its Ujjwala Yojana to include 1 crore more households while cooking activity remained active in most part of the lockdown.

Other products including aviation turbine fuel (ATF) and naphtha remained affected due to demand compression.