Application of the environmental Kuznets curve hypothesis in the Indian core industries: Towards a greener economy

Abstract

AbstractThe study investigates the long‐term effects of two core industries of India, namely crude oil and electricity on the environment by adopting the industry‐specific environmental Kuznets curve (IEKC) hypothesis. While crude oil is high‐polluting, the impact of the electricity industry on the environment is less severe. A traditional EKC hypothesis, described by an inverted U‐shape, demonstrates the relationship between economic growth and environmental degradation. The study tests IEKC individually for each of the two industries for time series data ranging from 1994 to 2021 for the crude oil industry and from 1994 to 2019 for the electricity industry. Carbon dioxide emission levels and the Index of Eight Core Industries are the indicators used to measure the environmental degradation and industrial growth levels, respectively. The study adopts autoregressive distributed lag approach to test the IEKC hypothesis. The findings suggest rejecting the IEKC hypothesis in the Indian crude oil industry, indicating its long‐term adverse environmental effects. In contrast, acceptance of the hypothesis in the electricity industry confirms that electricity energy can potentially lower the country's pollution level in the long run. The study adds to the existing literature by applying the IEKC hypothesis in the core industries of India to judge their environmental sustainability.