Unlocking India’s green transition: how fiscal deficits, oil prices, and technological innovation shape carbon emissions

Abstract In the contemporary landscape, environmental degradation and climate change pose formidable challenges for developing economies like India, which has undergone rapid economic expansion over recent decades. This growth has contributed to elevated global greenhouse gas emissions and significant ecological concerns. The present study investigates the intricate interconnections among India's fiscal deficit, oil prices, technological innovations, human capital, urbanization, foreign direct investment (FDI), and carbon dioxide emissions. Utilizing time-series data from 1991 to 2023, the analysis employs advanced econometric approaches, including the Autoregressive Distributed Lag (ARDL), Non-linear Autoregressive Distributed Lag (NARDL), and Dynamic Autoregressive Distributed Lag (DARDL) models, to assess both short- and long-term dynamics among these variables. Recognizing that outcomes can vary across methodologies, this research integrates multiple techniques to comprehensively explore the economy-environment nexus in India, filling a critical void in existing literature. Evidence of cointegration confirms enduring relationships among the factors. Although the models yield varying effects for some variables, they uniformly underscore the roles of fiscal policies, technological progress, and urbanization in curbing environmental harm while fostering sustainable economic development. Robustness is ensured through diagnostic and stability assessments. These findings offer valuable guidance for Indian policymakers in crafting targeted interventions to improve environmental sustainability and bolster economic advancement.