Does any nexus between electricity consumption and economic growth exist? Evidence from Haryana using VAR model

Abstract

Purpose In the fast-changing technological environment, electricity is the essence of the world economy and a significant means for all the modern world’s possessions. The ongoing economic downturn focuses on energy’s role in the economy. This study aims to explore the nexuses between per capita electricity usage and per capita state gross domestic product (SGDP) in Haryana, India. Design/methodology/approach The statistics from 1989 to 2015 have been analyzed using Johansen cointegration, vector autoregression and paired Granger-causality test. Findings The Granger causality test results show that a long-run association is absent. A short-run unidirectional relationship runs from per capita SGDP to per capita electricity usage. Practical implications As a policy suggestion, the policymakers may encourage energy conservation measures and renewable energy sources to lead the country’s sustainable energy supply. Moreover, Haryana can increase its influence in this sector and enter rapidly in the growing markets worldwide by stimulating the production and adoption of digital solutions for energy efficiency. Originality/value To the best of the author’s awareness, this research is one of its nature regarding systematically analyzing electricity usage and economic growth relationship in Haryana.