Electricity consumption and economic growth at the state and sectoral level in India: Evidence using heterogeneous panel data methods

Aviral Tiwari, Leena Mary Eapen and Sthanu R Nair

Energy Economics, 2021, vol. 94, issue C

Abstract: The demand for energy has been increasing over the years in India, which may be the result of its rapid economic growth trajectory. In this context, this study examines the direction of the Granger-causal relationship between electricity consumption and economic growth at the state and sectoral levels in India. In doing so, the panel cointegration tests with the structural break, the heterogeneous panel causality test, and the panel VAR based impulse-response model are employed. The study covers overall economic growth and growth in agricultural and industrial sectors for eighteen major Indian states for the period 1960–61 to 2014–15. The results provide evidence in support of a long-term relationship between economic growth and electricity consumption only in the agriculture sector. Further, the results provide evidence for the presence of unidirectional Granger-causality flowing in the direction of overall economic growth to electricity consumption at the aggregate state level. However, at the sectoral level, there is a unidirectional causal relationship running from electricity consumption to economic growth for the agriculture sector, and economic growth to electricity consumption for the industrial sector.

Keywords: Economic growth; Electricity consumption; Panel cointegration; Panel-granger causality; States, India (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320304047
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:94:y:2021:i:c:s0140988320304047

DOI: 10.1016/j.eneco.2020.105064

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().