ANNOUNCEMENTS
The demand for energy, particularly in the industrial sector in India has been rising for many years, along with the growing economy and improvement in structural transition. The desire to achieve economic development is at the cost of consuming high levels of energy within the iron and steel sector, higher than in other economies. The study, therefore, attempts to analyse the energy performance of the iron and steel firms in India using a sample of 50 firms from the PROWESS IQ database of the Centre for Monitoring Indian Economy (CMIE) for the period 2006-20. A two-step methodology using envelopment analysis along with econometric modelling is deployed to achieve the prime question for energy performance for the sample firms.
The results for the envelopment analysis show that the average trend for the sample iron and steel firms is a recurring S-shape with most of the firms fairly efficient. Further, most of the years showed an increase in the productivity of the firms along with most of the firms showing an improvement in their energy use during the period. Furthermore, the results of the econometric analysis suggest a positive relationship between the sales and profit after tax with the energy efficiency levels, implying that profitable and growing firms are energy efficient. The analysis also highlights private firms being relatively efficient compared to publicly owned firms. An increase in the expenditure on research and development has a positive influence on energy consumption, whereas increased spending on repairs of plants and machinery reduces energy efficiency because productivity declines with obsolete machinery. In addition, younger firms are more energy-efficient as compared to older firms.
Keywords: energy consumption, Indian iron and steel firms, technical efficiency, technological advancement, data envelopment analysis, fixed effects, determinants of energy efficiency.
