Status of Energy Consumption in the Manufacturing Industry of Eastern India – A Decomposition Analysis

In the present economic scenario, India, including each of its states, needs to adopt appropriate policies that would achieve rapid economic growth while simultaneously reducing its greenhouse gas emissions for a low carbon future. As manufacturing is a crucial component of the engine that spurs economic growth, and as it is a major consumer of energy, this paper aims to identify the core factors that have influenced energy consumption by the manufacturing industries of the eastern states (Bihar, Chhattisgarh, Jharkhand, Odisha and West Bengal) of India, in the period 2008-09 to 2012-13 and also wishes to make an interstate comparison of energy consumption. We conduct an index decomposition analysis, more specifically the log mean divisia index, to identify key factors behind the increase in energy consumption. The findings of the paper suggest that besides energy intensity, level of activity is a major contributing factor. The findings also suggest that there remains a lot of scope for improving energy related policies with regard to the manufacturing industries of eastern India