Deluge waters down Karnataka's fuel demand

BENGALURU: Torrential rain lashing the state has hit commercial tax revenue collection, with fuel consumption falling in August. Officials say the dip is expected to continue in September as well.
The consumption of motor fuel, especially diesel, saw a significant fall last month when Karnataka received continuous rain and many districts witnessed floods.
Diesel sales were 7.4 lakh kilo litre (kl) in August, down from 8.5 lakh kl in July, while petrol sales saw a significant fall from 3.2 lakh kl to 2.8 lakh kl. This resulted in a dip in fuel sales tax collection to Rs 1,462 crore in August, down from Rs 1,645 crore in July. In August 2021, the amount was Rs 1,729 crore.
This also brought down the overall commercial tax collection to Rs 6,190 crore in August, from Rs 6,470 crore in July. Officials said the difference is mainly because of the dip in fuel consumption due to rain, while revenue from Goods and Services Tax (GST) remained constant at a monthly average of Rs 4,500 crore. GST collection in August stood at Rs 4,627 crore, compared to Rs 4,721 crore in July and Rs 4,642 crore in August 2021.
"This shows that consumption of fuel, especially diesel, has come down, while sales of all other commodities continue to be normal. We find incessant showers as the main reason for this trend," said commercial taxes commissioner C Shikha.
She said movement of heavy vehicles, which run on diesel, has been hampered by heavy rain, which has seen hundreds of km of roads damaged and landslides on highways, especially in Malnad and coastal regions.
While the flood situation affected the agriculture sector at a time when sowing season had just begun, farmers did not switch on their irrigation pump sets, which consume diesel.
"Diesel consumption has come down also because tourism has taken a hit and most tourist vehicles are not operating. Sales of petrol have come down as people using private vehicles are not venturing out," said BT Manohar, a member of Karnataka State GST Advisory Council.
KM Basave Gowda, president of Akhila Karnataka Federation of Petroleum Dealers, however, said the trend of lower demand for diesel during rainy season is normal. "It is normal that diesel sells less during monsoon, but the dip in consumption this year is found to be sharper. This is because of the longer spell of the wet season."