IRJMSH Volume Issue [Year 2014] online ISSN 2277 – 9809 Towards Electricity Consumption in Irrigation and Agricultural Production in India Awadhesh Kumar Asstt Professor of Economics, Deshbandhu College, University of Delhi Jitender Kumar Asstt Professor of Economics, Deshbandhu College, University of Delhi Abstract: Irrigation, by and large, depends upon groundwater and around a quarter to one third level of irrigation extracted by groundwater in India Hence it is hypothesized that electricity consumption in irrigation causes the agricultural production in India It is tested by Granger Causality techniques during the period 1970-71 to 2009-10 and found the unidirectional causality running from electricity consumption to yield Keywords: Electricity consumption, Agricultural production, Augmented Dickey Fuller and Granger Causality JEL Classification: Q1, Q4, Q43, Q430 International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 14 online ISSN 2277 – 9809 Volume Issue [Year 2014] IRJMSH Introduction Agricultural production in India heavily depends upon the irrigation About 60 percent of total energy requirements for crop production were found under different methods of irrigation (Mittal and Dhawan, 1989) It is clearly observed by Singh and Mittal (1992) that energy consumption of all crops in Punjab has the highest in irrigation (above 50 percent) Hence, it is said that irrigation plays the significant role in all farm operations In spite of this, Pachauri (1998) is clearly mentioned (Figure 1) that consumption of electricity and diesel has significantly increased up to 50 percent from 1950-51 to 1995-96 However, it is also support and provide evidence (Figure.2) of the highest electricity consumption during the period 1980-81 to 2006-07(Jha, et.al., 2012) This implies that there is robust structural change in the consumption of energy inputs in Indian agriculture Figure Pattern of Energy Consumption in Indian Agriculture (in %) Electricity & Diesel 5.37 Energy Consumption in 1950-51 Energy Consumption in 1995-96 Source: Pachauri, 1998 Source: Pachauri, 1998 Tractors 2.12 Human Labour 36.18 Tractors 30 Human Labour Animal Labour 56.33 Animal Labour 12 Electricity & Diesel 50 Figure Consumption of Commercial Energy in Indian Agriculture (in %) Commercial Energy Consumption in 1980-81 Commercial Energy Consumption in 2006-07 Source: Jha, et.al 2012 Source: Jha, et.al 2012 Pesticides 1.27 Pesticides 0.18 Diesel 1.51 Electricity 40.64 Diesel 19.99 Fertilizer 35.17 Fertilizer 56.55 International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Electricity 44.67 Page 15 IRJMSH Volume Issue [Year 2014] online ISSN 2277 – 9809 Nonetheless, about 55-60 percent of India’s agricultural land rely on groundwater for irrigation It is, therefore, said that Indian agriculture is heavily dependent on groundwater Indian farmers extract about 150 km3 of groundwater, making India the largest user of groundwater in the world (Shah, et.al, 2004) It is also observed by Shah, et.al (2004) that electricity use in irrigation is accounted into a quarter and a third (i.e 31 percent) Hence, it is said that electricity use in the extraction of groundwater is significantly important Moreover, electricity use in the Green Revolution strategy of agricultural intensification would make it success in terms of irrigation (Dubash, 2007) However, electricity is also used in other farm operations like threshing, cane crushing, drying, etc Indeed, electricity consumption in agricultural production has mentioned the interrelationship Thus, in this paper an attempt has been made to establish causal relationship between electricity consumption and agricultural production in India since Green Revolution (i.e during 1970-71 to 2009-10) This relationship would be found by using data from Electricity consumption in agriculture under ‘Energy Statistics’ of CSO and ‘Agricultural Statistics at a Glance’, Ministry of Agriculture and Cooperation, Government of India Brief Review of Causality Relation: The causal relationship between energy consumption and economic growth has been very much popular in 21th century, particularly since the seminal work of Kraft and Kraft (1978) In that study it is found the unidirectional causality from energy consumption to GNP of USA during the period 1947-1974 However, Causality relation is defined in various directions, viz unidirectional, bidirectional and neutral causality Narayan and Singh (2007) investigated the nexus between electricity consumption and economic growth in Fiji by using multivariate framework and found a unidirectional causality running from electricity consumption to economic growth On the other hand, Ghosh (2002) established unidirectional causality from economic growth to electricity consumption in India Similarly, Wolde-Rufael (2006) has found a positive unidirectional relation running from real per capita GDP to electricity consumption for six countries out of seventeen African countries Besides, Morimoto and Hope (2004) have found an evidence of bidirectional causality between electricity consumption and economic growth in Sri Lanka in period 1960-61 to 1997-1998 Likewise, Odhiambo (2009) has found the bidirectional causality between electricity consumption in a simple trivariate framework using International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 16 Volume Issue [Year 2014] IRJMSH online ISSN 2277 – 9809 employment rate as an intermittent variable, during the period 1971 to 2006 And lastly, there are some previous studies have shown the empirical evidence of neutral relation between energy consumption and economic growth; such as Yu and Hwang (1984) for the case of USA, similarly Yu and Choi (1985) for the case of USA, UK, Poland Agricultural production is one of the major components for the national income accounting and electricity is directly or indirectly involved in crop production Hence, this study has decided to justify the relationship between electricity consumption and agricultural production in India since Green revolution Research Techniques This work has the objective to find out the causal relationship between electricity consumption and agricultural production in India since Green revolution There are two indicators applying for achieving the results; one is yield of food grains in terms of kg per hectare (Yt) as the indicator of agricultural production and another indicator is electricity consumption by the agricultural sector in terms of per hectare (Et) In this study, it would like to apply the concept of causality by Granger (1969) for achieving the objective There are various steps of Granger Causality: According to Granger causality, all the variables (say Yt and Et) should be stationary For the stationary, unit root test is applied by ADF (Augmented Dickey Fuller) test ∆Yt = β1 + β2t + Yt-1 + Ʃαi∆Yt-i + Where t is a pure hite oise ter t a d ∆Yt = (Yt-Yt-1) I ADF, it is tested that hether = or not If it is zero, variable has unit root i.e it is non-stationary Similarly, unit root test is applied for Et In Granger causality, lag term would be properly defined In this work lag term is defined either AIC (Akaike Information Criterion) or SBC (Schwarz Bayesian Criterion) Finally, Causality Model expressed by Gujarati (2007) as: Yt = ƩαiEt-i + ƩβjYt-i + ut Et = Ʃ iYt-i + Ʃ jEt-i + et International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 17 IRJMSH online ISSN 2277 – 9809 Volume Issue [Year 2014] Where it is assumed that ut and et are uncorrelated And the direction of the causality depends o the sig ifica ce le el of Ʃαi, Ʃβj, Ʃ i a d Ʃ j with the null hypothesis of no causality between electricity consumption (Et) and Yield (Yt) Here, Yt and Et are taken into consideration in natural logarithm term Empirical Results In Granger Causality, the first step is to test the stationarity of the variables Table.1 shows the ADF (Augmented Dickey Fuller) test for both variables: yield of food grains (Yt) and electricity consumption (Et) in Indian agriculture during the period 1970-71 to 2009-10 At the level form Yt and Et are non-stationary (except Et is stationary at 10 per cent level of significance) But, it is necessary to note that all variables should be stationary Further, it is tested at first difference and found that that both variables are stationary at per cent and 10 per cent level of significance, respectively (table.1) Table.1 Augmented Dickey Fuller Test (ADF) Augmented Dickey Fuller Test Lag Determination Level Form First Difference lag AIC SBC Yt Yt Et -5.135 -4.877 Item Et Intercept -0.743 -2.80** -10.53* -2.82** -5.284 -4.849 Trend & Intercept -2.14 -0.6 -10.40* -3.30** -5.254 -4.638 None 3.053 1.682 -9.077* -1.23 -5.574 -4.744 Sources: Energgy Statistics from Central Statistical Organisation, Govt of India and Agricultural Statistics at a Glance, Ministry of Agriculture, Govt of India Note: Yt and Et implies the yield of food grains and electricity consumption per hectare respectively Both are in natural logarithm term While * and ** indicate per cent and 10 per cent significance level respectively Second step for Granger Causality is to identify the lag term Owing to stationarity of both variables at first difference, the lag term is identified accordingly Hence it is identified at third lag as per AIC or SBC criterion (table.1) International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 18 IRJMSH Volume Issue [Year 2014] online ISSN 2277 – 9809 Table.2 Granger Causality between Electricity Consumption and Yield of Food Grains Null Hypothesis Lag F-Value Significance Conclusion Electricity does not cause Yield 2.78 Do not Reject Unidirectional Yield does not cause Electricity 3.59 Reject (7%) Electricity does not cause Yield 2.04 Do not Reject Yield does not cause Electricity 1.82 Do not Reject Electricity does not cause Yield 2.35 Reject (10%) Yield does not cause Electricity 0.59 Do not Reject Electricity does not cause Yield 3.24 Reject (5%) Yield does not cause Electricity 2.62 Reject (10%) Neutral Unidirectional Bidirectional Sources: Energgy Statistics from Central Statistical Organisation, Govt of India and Agricultural Statistics at a Glance, Ministry of Agriculture, Govt of India Lastly, Granger causality test is applied in this practice, still, up to the fourth lag term (table.2) At the first lag, unidirectional causality is running form yield to electricity consumption, while it is neutral at second lag However, it is again unidirectional causality in third lag, but it is running from electricity consumption to yield; whereas at the fourth lag, it is bidirectional causality Although Granger Causality is more appropriate at third lag as per the lag selection criterion Hence, it is inferred that electricity consumption causes the yield in India during 1970-71 to 2009-10 (i.e after Green Revolution) Conclusion Irrigation is the highest energy user in farm operations in Indian agriculture It, by and large, depends upon groundwater The groundwater extraction in India is occurred by either pump set International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 19 IRJMSH Volume Issue [Year 2014] online ISSN 2277 – 9809 (electric and diesel) or traditional technique But literature suggests that electricity consumption in irrigation lies between a quarter and one third However, electricity is also used in other farm operations like threshing, cane crushing, drying, etc But electricity is wildly used in irrigation of almost arable area Hence, this study has empirically analysed the causal relation between electricity consumption and yield of food grains in Indian agriculture during 1970-71 to 2009-10 (i.e after Green Revolution) and found the unidirectional causality running from electricity consumption to yield Research Implications It is concluded that electricity consumption (in terms of groundwater extraction) causes the agricultural production since green revolution The implication of this study is to generate electricity from given natural resources (like through hydro-electric power, etc) of the Indian economy and provide proper subsidized electricity to farmers, so that farmers produce more and more food grains for the sake of feeding increased population And also provide an appropriate channelization of transmission and distribution (T&D) of electricity On the other hand, diesel consumption in agriculture is the substitutes of the electricity to extract groundwater, but it has in limited source in India and mostly imported from Gulf countries Hence, electricity consumption in agriculture plays the significant role in India Obviously this study provides a significant glance of electricity consumption on agricultural production in India References: Dubash, N.K (2007) The Electricity-Groundwater Conundrum: Case for a Political Solution to a Political Problem Economic and Political Weekly, 42 (52), 45-55 Ghosh, S (2002) Electricity Consumption and Economic Growth in India Energy Policy, 30 (2), 125-129 Granger, C.W.J (1969) Investigating Casual Relations by Econometric Models and Cross Spectral Methods Econometrica, 37(3), 424-438 Gujarati, D.N & Sangeetha (2007) Basic Econometrics New Delhi: Tata McGraw Hill Jha, et.al (2012) Changing Energy-use Pattern and Demand Projection for India Agriculture Agricultural Economics Research Review, 21(1), 61-68 International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 20 IRJMSH Volume Issue [Year 2014] online ISSN 2277 – 9809 Kraft, J & Kraft A (1978) On the Relationship between Energy and GNP Journal of Energy and Development, 3, 401-403 Mittal, J.P & Dhawan, K.C (1989) Energy Parameters for Raising Crops Under Various Irrigation Treatments in Indian Agriculture Agriculture, Ecosystems and Environment, 10(7), 793-804 Narayan, P.K & Singh, B.,(2007) The Electricity Consumption and GDP nexus for the Fiji Islands.EnergyEconomics,29(6),1141-1150 Odhiambo, N.M (2009) Electricity Consumption and Economic Growth in South Africa: A Trivariate Causality Test Energy Economics, 31(5), 635-640 Pachauri, R.K (1998) Economics of Energy Use in Agriculture Indian Journal of Agricultural Economics, 58(3), 213-222 Shah, et.al (2004) Irrigation Institution in a Dynamic Economy: What Is China Doing Differently from India Economic and Political Weekly, 39 (31), 3452-3462 Singh, S.& Mittal J.P (1992) Energy in Production Agriculture New Delhi: Mittal Publications Wolde-Rafael, Y (2006) Electricity Consumption and Economic Growth: A Time Series Experience for 17 African Countries Energy Policy, 34(10), 1106-1114 Yu, Choi J.Y (1985) The Causal Relationship between Energy and GNP: An International Comparison Journal of Energy and Development, 10, 249-272 Yu, Hwang B (1984) The Relationship between Energy and GNP: Further Results Energy Economics,6(3),186-190 Websites: http://www.mospi.nic.in/Mospi_New/upload/Energy_Statistics_2005, 2013.pdf http://www.eands.dacnet.nic.in/Publication12-12Agriculture_at_a_Glance%202012/Pages85136.pdf International Research Journal of Management Sociology & Humanity http:www.irjmsh.com Page 21