Interrelationship Between Economic Growth and Environmental Degradation: An Empirical Analysis of Major Indian States

This study investigates the relationship between economic growth, measured by Gross State Domestic Product (GSDP), and environmental degradation, proxied by CO₂ emissions, across 19 major states of India from 2005 to 2020. The analysis employs trend analysis and the Granger causality test to elucidate the dynamics between these variables. The findings reveal a consistent upward trend in GSDP across all sampled states. Concurrently, CO₂ emissions have increased. The Granger causality test establishes a unidirectional causal relationship from GSDP to CO₂ emissions, confirming that economic growth drives an increase in emissions but not vice versa. This partially aligns with the Environmental Kuznets Curve (EKC) hypothesis, which posits that economic development initially leads to environmental degradation before eventual improvement. The study's findings underscore policymakers' need to integrate environmental considerations into economic planning.