The Relationship between Renewable Energy Consumption and GDP Growth: An Econometric Study of India (2000–2025)

India currently stands as the world's third-largest energy consumer, facing the dual challenge of sustaining rapid economic expansion while fulfilling international climate commitments. The primary objective of this research is to empirically investigate the causal relationship between renewable energy consumption (REC) and Gross Domestic Product (GDP) growth in India. By analyzing the "Growth versus Green" trade-off, this study seeks to determine whether renewable energy acts as a fundamental driver of economic progress or if economic growth is a prerequisite for investing in green

technologies.Methodology: This study employs an econometric framework using time-series data spanning from 2000 to 2025. To ensure robust results, the Augmented Dickey-Fuller (ADF) test is utilized for stationarity checks, followed by the Autoregressive Distributed Lag (ARDL) Bounds Testing approach to identify long-term cointegration between variables. Furthermore, the Granger Causality Test is applied within a Vector Error Correction Model (VECM) framework to ascertain the direction of causality between renewable energy adoption, capital formation, and economic output.

Key Findings: Preliminary econometric analysis indicates a significant positive long-term relationship between renewable energy consumption and India’s GDP. The results support the "Growth Hypothesis," suggesting that a 1% increase in renewable energy infrastructure leads to a measurable rise in industrial productivity and service sector efficiency. The causality test reveals a unidirectional flow from renewable energy consumption to economic growth, implying that energy transition does not hinder development but rather catalyzes it through energy security and job creation in the green tech sector.Policy Implications: The findings suggest that the Indian government should continue to prioritize the National Green Hydrogen Mission and the Production Linked Incentive (PLI) schemes for solar modules. Since renewable energy is found to be a driver of growth, policy interventions should focus on reducing the cost of capital for green projects and enhancing grid stability to integrate intermittent power sources. This research concludes that for India, the transition to a low-carbon economy is not just an environmental necessity but a strategic economic advantage.