Does any relationship between energy consumption and economic growth exist in India? A var model analysis

• Author: Simmi Vashishtha,Kamaljit Singh
• DOI: http://doi.org/10.1111/opec.12185
• Date: 01 September 2020
• Published date: 01 September 2020

Does any relationship between energy

consumption and economic growth exist in

India? A var model analysis

Kamaljit Singh and Simmi Vashishtha

Research Scholar, University School of Management, Kurukshetra University, Kurukshetra, Haryana

136119, India. Email: kamaljitsehjanusm17@kuk.ac.in

Abstract

Energy is the lifeblood of the global economy, a key input to almost all the goods and services of

the modern world. The primary objective of this study is to examine the relationships between per

capita energy consumption and per capita GDP in India from 1970–1971 to 2014–2015. The data

analysis was conducted using the three-stage Johnson cointegration, vector autoregression and

Granger causality test. The results of the study documented that there was the presence of

unidirectional causality running from per capita GDP to per capita energy consumption and the

absence of a long-term equilibrium relationship between per capita energy consumption and per

capita GDP in India. More significantly, India has already demonstrated an impressive ability to

develop, deploy, replicate and scale up innovative, market-based approaches to energy efficiency.

The country has an excellent basis for further energy efficiency policy innovation and market

creation, including a strong community of non-governmental organisations, research institutes and

think tanks active in energy efficiency.

1. Introduction

The pioneering article of Kraft and Kraft (1978) on the relationship between energy-

GNP relationship in the U.S. for the period 1947-1974 raises curiosity and has led

researchers to investigate economies of the various countries around the world. More

significantly, India has already demonstrated an impressive ability to develop,

implement, replicate and scale up innovative, market-based solutions to energy

efficiency. The country has an excellent basis for further energy efficiency policy

innovation and market creation, including a strong community of non-government

organisations, research institutes and think tanks active in the field of energy efficiency.

Gross national product (GNP) in the United States for the period 1947–1974 arouses

curiosity and has led researchers to research on the economies of different nations

around the world. In the cutting-edge paper Ghosh (2002) on the relationship between

electricity consumption and economic growth in India for the period 1951–1997, vector

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