Do shocks to electricity consumption revert to its equilibrium? Evidence from Indian states

Abstract

This study investigates the stationary properties of electricity consumption at the aggregate and user-group levels (agricultural, industrial, commercial, domestic, and miscellaneous) for 18 Indian states over the period 1971-72 to 2015–16. Our analysis employs the two-step Lagrange Multiplier (LM) and the three-step Residual Augmented Least Square Lagrange Multiplier (RALS-LM) unit root tests. The results obtained suggest evidence of stationarity at aggregate and user groups in most states. The findings infer that shocks to electricity consumption in the Indian states have only a temporary effect. These results suggest that electricity demand can be modelled for forecasting and policymaking.