Growth or emission targets: What India needs to sacrifice?

Balancing economic growth with environmental sustainability has become a critical challenge for India. As the growth drivers, Industrialization and transportation, are some major contributors to environmental degradation. As a result, this study examines the relationship between economic growth, growth drivers, and environmental quality across 18 subnational levels of India during 2006-2019. It applies Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) for long term estimation, and Driscoll-Kraay for robustness check. The findings validate the Environmental Kuznets Curve (EKC) hypothesis, with the turning point identified at Rs. 98,715.77. A 1% rise in economic growth raises CO₂ emissions by approximately 13.54%. Additionally, it shows that transportation contributes positively, and industrialization reduces emissions through cleaner technologies and regulatory compliance. This study additionally does an EKC analysis for individual states. The Juodis–Karavias–Sarafidis (JKS) test reveals a reciprocal Granger-based association between factories and economic growth, a unidirectional predictive relationship from transportation to industrialization, and from industrialization to emissions, but no granger association between growth and carbon emission. Collectively, these results suggest that India is at its EKC turning point, indicating that future growth can proceed without proportionate environmental costs. Given these findings, policymakers should amend stricter vehicular emission control, renewable energy integration, and state-specific strategies to ensure sustainable development pathways.