Energy Consumption Behavior of Food and Beverage Industry in India: A State Level Analysis

Abstract

The Food and beverage industry in India (FBII) is the sunrise sector of our economy. The growth of FBII is enabled and facilitated by an increase in energy intake (Ministry of Food Processing Industry, 2017). This paper tries to analyses the energy efficiency (EE) of the FBII by using energy intensity (EI) for major 15 states during1980-81 to 2017-18. The result reveals that EI varies across the states and it also observed that last few years EI increased for all the states as a result of the growth of FBII. Further, this paper identifies the factors which affect the EI of the FBII and addresses the potential endogeneity problem, applying the Hausman-Taylor Instrumental variables (HT-IV) method for isolating the effects of time-invariant covariates and also to tackle the potential endogeneity problem. This paper found that there exists endogeneity between EE and profit rate. It is found that firm size positively affected EE through profit rate. The present study also found that employees per worker positively influence EE while capital intensity is found to be adversely affected EE. Since degree of mechanization enabled and facilitated by increasing use of energy intake but with expansion of FBII if firms are adopt energy-saving technology that can enhance the energy efficiency. The result also suggests that in order to enhance EE in FBII, policies may be taken which may enhance firm size.