Using cross-state panel data and error correction Granger causality model we found trustworthy
results for India that were non-consistent in previous literature. We found that the electricity
consumption and per capita income cause each other. We argue our research to be more credible
because we use 254 data points whereas, previous researchers have given their conclusions only
on 30 - 40 data points. There is feedback effect of both the variables and effect of electricity consumption
is 40 times more than that of income to electricity. Furthermore, analysis at disaggregated
level of electricity consumption suggests that domestic and heavy industry electricity consumption
causes income growth and not the commercial, light industry, and agricultural electricity
consumption.