Stochastic conditional convergence in per capita energy consumption in India

Abstract This study examines the stochastic conditional convergence of per capita energy consumption in India by considering the types of energy consumption as well as energy consumption at sectoral levels, covering the annual data from 1971 to 2017. To do so, this study applies the two-step Lagrange Multiplier (LM), and the three-step Residual Augmented Least Square LM (RALS-LM) unit root tests, which accommodate up to two endogenously determined structural breaks. Our results reveal the evidence of per capita energy convergence for various types of energy consumption in the presence of two endogenous breaks. Further, we disaggregate each type of energy consumption based on their use in different sectors. The results derived from LM and RALS-LM unit root tests again support the convergence, barring a few sectors. Our findings give an indication to the government of India for adjusting the types of energy consumption to reach the carbon emission target and increase efficiency for a few sectors where we find divergence.