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Transitioning from Linear to Circular: Evaluating the Economic and Sustainability Potential of Circular Economy in India

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Author Affiliations

  • 1Department of Economics, Government College, Kanina (Mahendergarh), Haryana, India
  • 2Department of Economics, Government College, Mahendergarh, Haryana, India

Int. Res. J. Environment Sci., Volume 15, Issue (4), Pages 35-45, October,22 (2026)

Abstract

We examine various indicators of the circular economy in the Indian context. For this purpose, we have analyzed the relationship between material consumption (Direct Material Consumption, DMC and Material Footprints, MF), share of renewable energy in the energy basket, CO₂ emissions and economic growth (GDP) in India from 1990 to 2024. Using data extracted from international organizations databases (World Development Indicators, WDI and United Nation Environment program, (UNEP), the paper uses Johansen cointegration and VECM to understand the long-run and short-run relationship between variables. The paper found that GDP, material consumption, and renewable energy have a steady long-run equilibrium with GDP adjusting at a speed of 23-28% per year. But we find no cointegration between CO₂ emissions, material use, and renewable energy, suggesting that emissions are driven by factors outside this system. We observed that results pertaining to the short-run indicate that material consumption has a negative effect on GDP and renewable energy coefficients are insignificant.

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