Investigating Environmental Kuznets Curve: A Panel Data Analysis for India

Abstract

The main objective of this study is to examine the relevance of the Environmental Kuznets Curve (EKC) hypothesis in describing the relationship between air pollution and development of a panel of 21 Indian states, using data for the period 2001–2016. This article attempts to use panel unit root, the panel cointegration test and panel dynamic ordinary least square approach to examine the relationship among various variables, including the atmospheric concentration of sulphur dioxide (SO2)/nitrogen dioxide (NO2), net state domestic product, social sector expenditure and other variables used as a proxy for the composition effect and development effect. The empirical analysis indicates that there exists a long-term relationship between the concentration of SO2 and NO2 with per capita income and other variables. In terms of the EKC hypothesis, the findings recommend the existence of a cubic relationship in the long run and emphasise the need to bring environment-friendly structural changes in economic activity and to enhance sustainable development through technological innovation.