The Nexus of ICT, Electricity Consumption and Economic Growth in India : An ARDL Approach

This study examines both the short-run and long-run relationship among Information and Communication Technology (ICT), economic growth and electricity consumption using annual time-series data for India for the period 1991–2014. All the variables under study are I (1) as per Dickey-Fuller-Generalized least square unit root test results. ARDL bounds test has been used for testing cointegration and VECM Granger causality test has been employed for causality analysis. ARDL test suggests that ICT stimulates economic growth in the short-run but not in long-run, whereas electricity consumption has significant and positive impact on economic growth in long-run and short-run as well which supports the energy-led growth hypothesis. Though there is no cointegration when electricity consumption becomes dependent variable and other variables are independent. Economic growth does not granger cause electricity consumption in short run. These findings suggest that India should focus on ICT expansion to accelerate economic growth in short-run and India should not follow energy conservation policies as it might adversely impact economic growth in both short- and long-run. Instead India should focus on energy efficient policies. This study has crucial policy implications. Hence, a proper balance and co-ordination among ICT policy, energy policy and economic growth policy is recommended