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Open AccessAn Econometric Analysis of India's Urbanization, Energy Consumption, Economic Growth and CO2 Emission
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This study endeavors to elucidate the intricate relationships and impacts of energy consumption, urbanization, and economic growth on carbon dioxide (CO2) emissions in India, spanning from 1975 through 2019. Data for this analysis is procured from the World Bank. An application of the Vector Error Correction Model (VECM) tests the long-term relationships between these variables. Additional verification of causality is sought through the Granger causality test. The study reveals unidirectional causalities: energy consumption and economic growth both lead to increased CO2 emissions. In the short run, our findings indicate a causality flow from Gross Domestic Product (GDP) and energy consumption to CO2 emissions, while urbanization does not significantly contribute to this causality. The results of the VECM, Granger causality, and Wald tests corroborate the existence of a long-term causal relationship between energy consumption, urbanization, and economic growth on CO2 emissions in India. Based on these findings, the study proposes that India should focus on the introduction and rejuvenation of energy resources that can address the country's escalating energy demand. A shift from conventional energy sources including coal, hydro, oil, and gas to renewable, environmentally-friendly alternatives is recommended. This transition would contribute to a reduction in CO2 emissions, thus promoting sustainable economic growth for India in the long run.
