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Measuring Energy Intensity and Elasticity in India: A Dummy Variable Approach for Unit Level Household Data

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  • Alok Kumar Pandey

Abstract

In the present article an attempt has been made to estimate the responsiveness of prices and household expenditure on consumption of energy for cooking and lighting at household level in rural and urban areas in India. Household level energy elasticities are estimated for the rural and urban areas with the help of dummy variable regression approach by using National Sample Survey Organization (NSSO) 66th quinquennial rounds of unit level data for the year 2009–2010. The results reveal the fact that energy intensity for rural areas is higher than urban areas while average expenditure recorded on energy for cooking and lighting in urban areas is higher than in rural areas at all India level. Majority of the households are using dirty fuel for cooking in rural areas while in urban areas clean fuel, that is, LPG is used for cooking. The expenditure on energy for cooking and lighting at household level is inelastic. The marginal budget share in rural and urban areas is the same. Results reveal the fact that 100 percent increase in the prices of energy for cooking and lighting will increase the expenditure of households in rural region more than in urban region.

Suggested Citation

  • Alok Kumar Pandey, 2014. "Measuring Energy Intensity and Elasticity in India: A Dummy Variable Approach for Unit Level Household Data," Jindal Journal of Business Research, , vol. 3(1-2), pages 77-92, June.
    • Handle: RePEc:sae:jjlobr:v:3:y:2014:i:1-2:p:77-92
    DOI: 10.1177/2278682116647602
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