Abstract
The study examines the effects of electricity consumption from different sectors such as agricultural, commercial, domestic, industrial (HV), industrial (LV-MV) and miscellaneous sectors on economic growth over the period of 1981-2019 in the case of India. We used SVAR framework and concluded that the consumption of electricity from agriculture sector has a negative impact on economic growth, whereas the industrial (HV and MV-LV) and commercial electricity consumption has positive impact on economic growth. Similarly, electricity consumption by the domestic sector has less positive effect on economic growth. Further, we computed the total factor productivity growth (TFP) by using the DEA method and showed the effects of sector-wise electricity consumption on TFP as the robustness of our analysis. We obtain similar kind of results. From the policy perceptive, the study suggests that the government must speed up the construction of a power grid to improve the availability of electricity for achieving higher rate of economic growth.
Highlights
In last 20 years, multiple research are carried out to examine the possible linkage of energy usage and economic development
2019, a structural VAR model is applied to examine the empirical link among growth and electricity usage
The results reveal that rising home energy use contributed to India's economic growth over the study period, this may have something to do with the fact that India's population is growing at an alarmingly fast rate
Summary
In last 20 years, multiple research are carried out to examine the possible linkage of energy usage and economic development. Electricity power is a prominent source of secondary Renewable energy that is obtained through the conversion of primary energy. It is a form of crucial energy resource that is directly related to the country’s economy and it’s citizen’s development and well-being. In the development of industrial sector, is a vital indicator of a country's increasing per capita income and economic well being. The rapid development of India's economy has resulted in a substantial increase in electricity demand. Electricity production and consumption have a direct impact on economic growth and development quality.
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