Reexamining the Environmental Kuznets Curve: Empirical Evidence from India

The Environmental Kuznets Curve hypothesis is a theory which states that the connection between environmental pollution and economic expansion can be characterized by an inverse-U curve, where pollution increases in the early stages of industrialization and after a specific point of income per capita, environmental standards seem to benefit from economic growth (Stern, 2003). In addition, Porter’s hypothesis states that stricter environmental regulations can positively influence technological progress, and through an increasing innovation capacity, improve economic growth and pollution levels. In this paper, I examine the validity of both theorems for three air pollutants of Indian states (SO2, NO2, SPM) and for a time span of 24 years (1990-2013). By using the Hausman specification test and several robustness tests as an attempt to provide more robust and concrete results, I conclude that the requirements of the EKC are only satisfied for the case of sulfur dioxide, with a turning point of around 43,750 Indian rupees. The differences we observe within the same indicators but also between SO2, NO2 and SPM pollutants of air, highlight the fact that different environmental policies are necessary to attack each pollutant separately and more efficiently