ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH IN INDIA: CAUSALITY ANALYSIS

Energy is an indispensable part of the growth process for every country. Cost effective, non- threatening energy consumption is very important. Electricity is that form of energy which is used extensively both in the commercial sector and noncommercial sector. The fast growth of industrialization, urbanization, population growth and the modern agricultural sector has driven the demand for electricity to a much higher level as electricity is the core of production process. This study aims to investigate the relationship between electricity consumption and economic growth in India over the period 1991-2018. Per capita GDP is taken as proxy variable for economic growth. The study uses time series analysis and Unit root analysis, Johansen Co-integration test and Granger Causality test have been applied for analysis. It is found that there is a causal relationship between electricity consumption and economic growth but not vice versa. The granger causality test shows that there is a unidirectional relationship between electricity consumption and economic growth.