Economic development and environmental quality: an econometric study in India

Abstract

PurposeThe purpose of this paper is to explore the emissions of SO2, NO2 and SPM in India during 1991‐2003. The Environmental Kuznets' Curve (EKC) is applied to explore the relationship between economic development measured in terms of State Domestic Product (SDP) per capita and different air quality parameters for industrial and residential locations respectively. Several developmental factors contribute to change in emissions of these air quality parameters. These factors generally include the scale effect, composition effect and the pollution abatement effect.Design/methodology/approachThe methodology has focused on testing the EKC hypothesis at state level in India, using cross‐section and time series data for 15 major states. The study has made use of fixed effect version of pooled data estimation technique.FindingsThe findings in the paper indicate only a directional inverted U‐shaped EKC relationship for both industrial and residential locations, without being significant statistically. Basically, some developmental factors such as population density, urbanization and policy variables are significant with expected signs in explaining the relationship for most of the cases. The calculated turning point of SDP per capita for different air quality parameters ranges between $163.46 and $408.66Research limitations/implicationsThe present study has been restricted to a shorter time period (i.e. 1991‐2003) because of the unavailability of continuous time series data. The study only includes 15 major Indian states and excludes other states due to lack of proper data sources.Practical implicationsThe inclusion of several developmental variables (such as urbanization, infrastructure development, population density, policy) helps to detect whether the emissions of different air quality is mainly due to economic growth or other reasons.Originality/valueThe investigation in the paper allows determination of the level of SDP per capita, the emissions of different types of air quality will start to decrease in different Indian states.