An Empirical Analysis to Examine the Causal Nexus Between Economic Growth and Environmental Pollution in India

There is a long-standing debate on the relationship between economic development and environmental quality. The environmental Kuznets curve hypothesis posits an inverted U relationship between environmental pollution and economic development. In the last few years several studies have appeared dealing with the relationship between the scale of economic activity and the level of pollution. Several empirical studies have identified a bell-shaped curve linking pollution to per capita GDP. The relationship between economic development and environmental quality is checked for a developing country like India using annual (time series) data, from 1990 to 2015, retrieved from Indiastat website. By employing the methods of Johansen co-integration test and granger causality test, the paper aimed to investigate the interactions between the variables empirically and Multiple linear regression is used to identify the determinants of Environmental pollution in India. The long run equilibrium relation between the variables are checked using co-integration test, the result of Johansen cointegration reveals that no cointegration relation between the variables. The existence of a relationship between variables does not prove causality, hence the Granger causality reveals that the causation runs from growth to Pollution. The multiple linear regression result revels the expected relation as provided in the literature Hence, it can be concluded that Economic growth leads to more Pollution in India. Based on the analysis, Policy implications are provided, regarding healthy and pollution free environment