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By Henning Gloystein and Nidhi Verma
SINGAPORE/NEW DELHI (Reuters) - Indian oil consumption in 2017 grew at its slowest in four years, according to government statistics, hit by the government's demonetisation move and a tax increase that knocked the gain in fuel use back to a modest 2.3 percent.
The low growth also coincided with another year of weak, albeit improving, new vehicle sales.
"The demonetization exercise hit consumption, particularly in the first half of 2017. We are likely to see better growth this year," said Sukrit Vijayakar, director at Indian energy consultancy Trifecta.
Also, "naphtha demand ... was down 8 percent for 2017
as a whole, possibly driven by more LPG use in petrochemicals," it said.
"Higher purchasing power of consumers along with rapid growth in rural infrastructure will drive two-wheeler and passenger car sales," he said.
SLOW BUT IMPROVING CAR SALES
That means India broke a previous record of 2.8 million in annual new sales from 2012.
The figure, though, remains far below China's new car sales of almost 3 million a month.
The low auto sales are partly explained by India's annual per capita gross domestic product (GDP) being merely a fifth of China's. Fuels at Indian petrol stations are also much more expensive.
If an Indian citizen with an average salary buys 10 gallons of gasoline per month, that would represent nearly 30 percent of the person's income, while the average Chinese would fork out just 5 percent, data from statistics company Numbeo showed.
However, India's lacklustre auto sales may pick-up as its economy continues to grow strongly, at over 6 percent per year.
Trifecta's Vijayakar said car and motorbike sales in India "have shown good growth in the last few months ... (and) should be better this year."
(Reporting by Henning Gloystein; Editing by Tom Hogue)
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