Decomposition of Energy Consumption in India: A Case of Output Leakage and Technology Improvement
31 Pages Posted: 7 Apr 2016
Date Written: 2015
The paper attempts to study relative contribution of the specific sources of changes in energy use in the Indian economy. Results of a structural decomposition analysis in a constant price hybrid Input-Output framework underscore contribution of the final demand shifts as a significant factor impacting the energy use. Nevertheless, changes over time in production technology exhibit tremendous conservation potential. The paper notes that technology improvement occurs gradually and the effect is profound over the long term. Further, the results validate the extent of output leakage in the energy sector thus highlighting domestic supply constraints. A high ratio of India’s energy imports-to-energy embedded in exports is observed which has implications from an environment perspective.
Keywords: energy, India, technological change, input-output, demand shift, decomposition analysis
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