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Green Finance, Innovation, and Environmental Sustainability in India: A Dynamic ARDL Simulation Approach

Author

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  • Malayaranjan Sahoo
  • Seema Saini
  • Shreyasee Kaushik

Abstract

This study investigates the dynamic relationship between CO2 emissions and key macro‐environmental variables in India from 1990 to 2022 using the Dynamic ARDL Simulation approach. The model confirms a stable long‐run equilibrium, with an error correction term of −0.337 indicating a 33.7% annual adjustment rate. In the short run, green finance significantly reduces emissions, while GDP growth increases them. Technological innovation, renewable energy, urbanization, and education show no immediate impact. However, long‐run estimates reveal that technological innovation (0.275) and GDP (0.944) raise emissions, while green finance (−0.518), renewable energy (−0.355), urbanization (−0.433), and education (−0.948) significantly reduce emissions. These results underscore the need for India to align technological progress and economic growth with sustainable practices, redirect finance toward low‐carbon pathways, and invest in clean energy and education.

Suggested Citation

  • Malayaranjan Sahoo & Seema Saini & Shreyasee Kaushik, 2026. "Green Finance, Innovation, and Environmental Sustainability in India: A Dynamic ARDL Simulation Approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(4), pages 5126-5141, August.
    • Handle: RePEc:wly:sustdv:v:34:y:2026:i:4:p:5126-5141
    DOI: 10.1002/sd.70608
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