Oil product sales, a proxy for oil demand in Asia's third-largest oil consumer, totalled 12.04 million tonnes in August, according to the data posted on the Petroleum Planning and Analysis Cell of the Oil Ministry.
Growth in fuel consumption in August was slower than July, when local sales rose an annual 9.4%, as India was on the brink of experiencing the worst drought in three years. The monsoon rains recovered subsequently, with parts of the country facing floods.
"The Indian demand growth will likely abate somewhat in the second half of 2012, reflecting the global economic malaise, with a gain of 3.8% assumed to take total demand up to an average of 3.6 million barrels per day," the International Energy Agency wrote in its September report.
Diesel consumption, which makes up more than a third of local fuel sales, rose an annual 10.4% to 5.05 million tonnes in August mainly due to robust demand from the power sector.
The failure of power grids for two consecutive days in August led to blackouts in states where some 670 million people live, fuelling diesel demand after diesel-fired generators sprung into action.
Diesel prices are fixed by the government at a cheaper rate to protect the poor and control inflation. But gasoline is sold at market rates, widening the gap between the prices of the two fuels.
Petrol consumption last month eased to an annual 7.5% to 1.31 million tonnes, slower than the previous month, as August car sales fell for the first time in 10 months. Motorcycle sales in India also fell for the first time in August since January 2009, underlining fears of sluggish economic growth.
India's oil products demand is likely to grow an annual 6.1% in 2012/13, the highest in five years, according to government estimates, as the country's thrust on infrastructure is likely to boost demand for industrial fuels.
India's August naphtha consumption rose 25.2% from a year earlier to 1.13 million tonnes, while that of kerosene fell 7% to 624,000 tonnes.
India is gradually replacing heavily subsidised kerosene with cleaner cooking gas, consumption of which rose by 5% in August to 1.34 million tonnes.
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