Energy Intensity of Indian Manufacturing Firms: Effect of Energy Prices, Technology and Firm Characteristics

The paper examines the factors that influence energy intensity in Indian industries. It has two parts. In the first part, trends in energy intensity are analysis and cross-industry panel data (taken from ASI) are used to estimate an energy demand function. The results show that energy demand responds negatively to a hike in energy prices and positively to a hike in real wages. There are indications from the results of the analysis that the post- 1992 decline in energy intensity of Indian manufacturing is attributable mostly to an improvement in energy use efficiency of energy intensive industries, which in turn may be traced to hikes in the real price of energy paid by manufacturing firms.