Renewable and nonrenewable energy consumption and economic growth in India

The present study investigates the impact of renewable and nonrenewable energy use on economic growth in India within the energy consumption-growth framework over the period 1971-2012 using a multivariate model wherein trade openness and financial development are included as additional variables. Empirical evidence confirms the existence of a long-run equilibrium relationship among the competing variables. The results indicate that nonrenewable energy consumption has a long-run significant positive effect on India's economic growth. In addition, it is shown that a bidirectional causality exists between nonrenewable energy use and economic growth in both the long run and short run. Based on these findings, it is suggested that a nonrenewable energy conservation policy may retard economic growth in India if initiated without due regard to renewable energy sources.