A blend of renewable and non-renewable energy consumption on economic growth of India: The role of disaggregate energy sources.

Abstract

India, with its rapidly growing economy, has an increasing demand for energy consumption. This study thus adds to the energy-economic growth literature by exploring the effect of renewable (hydro and nuclear) and non-renewable (coal and oil) energy consumption by different sources on the economic growth of India, spanning from 1985 to 2021. The ARDL estimator is used to assess the short- and long-run growth effectiveness of the explanatory variables, while the variance decomposition analysis (VDA) is employed to examine the degree to which one variable can explain the change in variance of another variable. Among the renewable energy sources, hydro-energy consumption is found to be impeding economic growth, while nuclear energy is found to be inducing India's economic growth in the long run. Furthermore, among the non-renewable energy sources, oil consumption is found to be impeding the economic growth, while coal consumption is observed to be augmenting India's economic growth in the long run significantly. The findings reveal that non-renewable energy use plays a crucial role in the economic growth of India; thus, from a policy standpoint, this study recommends the government to invest more in the advancement of the renewable energy sector in order to balance the energy mix and achieve sustainable economic growth.