This study aims to examine the impact of renewable energy consumption and non-renewable energy consumption on industrial growth in India using time-series data from 1991 to 2021.
The methodology used a systematic approach comprising unit root tests to evaluate the stationarity of the variables, the Autoregressive Distributed Lag bound test to assess how both types of energy contribute to industrial sector development and an error correction model to identify short-term adjustments toward long-term equilibrium. Diagnostic tests are adopted to assess the model’s robustness and model stability and the Granger causality test is used to determine the direction of causation between energy consumption and industrial growth.
The findings reveal that both renewable energy consumption and non-renewable energy consumption support industrial growth but fossil fuels have a greater impact. Meanwhile, the study discovers unidirectional causality running from energy consumption to industrialization.
The findings suggest that India should make greater use of renewable energy. The country should invest in renewable energy storage and infrastructure and implement energy efficiency standards to expedite the move toward renewable energy.
To the best of the authors’ knowledge, there are lack of studies that have observed the impact of renewable energy and non-renewable energy consumption together on industrial growth in the Indian context.
