Navigating Sustainability: The Interplay of Energy Consumption, Economic Growth, and FDI on Carbon Emissions in India Using ARDL Analysis

This study empirically analyses the influence of energy consumption, economic growth, and foreign direct investment (FDI) on carbon emission in India. The Autoregressive Distributed Lag (ARDL) bounds-testing approach is applied on time series data from 1990 to 2022 to determine the cointegration between series variables. The findings show that all variables are cointegrated. The Granger Causality test confirms unidirectional causality running from economic growth to carbon emissions, from carbon emissions to energy consumption, from energy consumption to foreign direct investment, and from foreign direct investment to renewable energy consumption. Also, the results presented a bidirectional causal relationship between foreign direct investment and carbon emission. Thus, the level of carbon emissions is significantly connected with economic growth and energy consumption. The rising energy demand further supports investment in the energy sector. Based on our findings, this study suggests the creation of policies towards mitigation of environmental pollution and promotion of investment in clean energy sources.