Energy Use and Economic Development in India – Some Empirical Evidence

Energy usage plays a pivotal role in economic development.It is like an engine which drives growth of the economy.Both fuel and electricity usages have a long lasting effect on growth of the economy.This paper examines the effect of energy use and electricity consumption on GDP of India for the period 1972 - 2014. In the first instance, energy use energy use(kg of oil equivalent per capita) has been used as independent variable and GDP per capita constant (2015 US$) as dependent variable. In the second instance, power consumption(kWh per capita) has been used as independent variable.The paper finds that there is a positive and significant impact of energy use(coefficient – 3.22),electric power consumption (coefficient – 1.67) on GDP percapita.From this it is clear that energy consumption has a positive impact on economic growth.