Impact of sectoral decompositions of electricity consumption on economic growth in India: evidence from SVAR framework

Abstract

This study examine the effects of electricity consumption from different sectors such as agricultural, commercial, domestic, Industrial (HV), Industrial (LV-MV) and Miscellaneous sector on economic growth over the period of 1981-2019 in case of India. We used SVAR framework and concluded that the consumption of electricity from agriculture sector has a negative impact on economic growth. Whereas, the Industrial (HV and MV-LV) and commercial electricity consumption have positive impact on economic growth. Similarly, electricity consumption by the domestic sector has less positive effect on economic growth. Further, we computed the total factor productivity growth (TFP) by using DEA method and show the effects of sector wise electricity consumption on TFP as the robustness of our analysis. We obtain similar kind of results. From the policy perceptive, the study suggests that government must speed up the construction of a power grid to improve the availability of electricity for achieving higher rate of economic growth.

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