Macroeconomic Environmental Interactions and the Path of India’s Energy Transition

India’s economic growth has long been intertwined with environmental challenges, particularly as it seeks to align development goals with climate commitments under the Paris Agreement. Despite increasing investments in green finance and renewable energy, structural barriers persist, limiting the pace of energy transition. This paper provides new empirical insights into the dynamic interactions between macroeconomic, environmental, and energy variables in India using a Bayesian Vector Autoregression (BVAR) framework over the period 2000–2020. Major findings include stagnant renewable energy consumption (REC) through 2027 amid rising CO₂ emissions and declining R&D spending, a negative impact of PM2.5 pollution and CO₂ emissions on REC, and strong path dependency in REC trends. Impulse response functions reveal that foreign direct investment (FDI) initially suppresses but later promotes REC, while paradoxical effects between R&D spending and environmental trade highlight misaligned policy incentives. To support India’s Viksit Bharat 2047 vision, the study recommends targeted reforms, including redirecting FDI toward renewable projects, boosting innovation funding for energy technologies, and realigning environmental trade policies to enhance energy transition outcomes. JEL Classification : E31, Q54, C32, O13