The report’s focus on poverty, human development setbacks, and transmission channels tied to energy imports, trade, remittances, and food security. India is highlighted as highly exposed due to its large population, heavy reliance on Middle East energy and inputs, and a large informal economy.
The report uses simulations calibrated to a 28-day disruption under varying adjustment periods (immediate, 4-month, and 8-month/most severe scenarios), applying country-specific poverty-growth elasticities and pass-through factors to baseline World Bank poverty data (2021 PPP lines).In the most severe scenario (28-day disruption with 8-month adjustment):
- Poverty rate rises from 23.9% to 24.2% (using the $4.20/day lower-middle-income country line).
- Approximately 2.46 million additional people are pushed into poverty (rounded to ~2.5 million in many summaries).
- Pre-crisis population in poverty: ~351.57 million.
- Post-crisis population in poverty: ~354.03 million.
- India’s population in the simulation: ~1,471 million.
Smaller impacts appear in milder scenarios (e.g., ~402,000 in immediate-adjustment Scenario 1; ~1.02 million in 4-month Scenario 2). South Asia (including India) accounts for the largest share of the regional total of ~8.8 million people at risk of falling into poverty across 14 simulated countries.
India is projected to lose 0.03–0.12 years of HDI progress under the short-duration (28-day) scenario. This reflects foregone gains in health, education, and income relative to 2013–2023 trends. Effects are smaller than in Iran (1–1.5 years lost) but could grow if the conflict persists, especially through indirect pressures on household spending and public services.
- Energy prices and imports: Over 90% of oil needs are imported, with >40% of crude oil and 90% of LPG sourced from the Middle East. Shocks raise fuel, freight, and input costs, squeezing household purchasing power.
- Trade and supply chains: 14% of exports and 20.9% of imports (including US$48 billion in non-oil goods like basmati rice, tea, gems/jewelry, and apparel) route through West Asian markets. Disruptions (e.g., Strait of Hormuz, war-risk premiums) hit logistics and MSMEs.
- Food security and fertilizer: 45% of fertilizer imports come from West Asia; 85% of domestic urea production depends on imported RLNG. Risks intensify ahead of the Kharif planting season (June onward), with potential food price rises affecting poor households. Urea stocks (~6.1 million tons) provide short-term buffering.
- Remittances and migration: 38–40% of India’s inward remittances come from Gulf Cooperation Council (GCC) countries, where ~9.37 million Indians reside. Gulf labor market disruptions threaten household incomes, food security, and education spending.
- Employment and livelihoods: ~90% of employment is informal, with risks concentrated in MSME-intensive sectors (hospitality, food processing, construction, steel, gems/jewelry). Low-skilled and informal workers face regressive impacts (e.g., a 1% GDP growth decline links to ~2% higher unemployment for low-skilled vs. ~1.5% for higher-skilled).
- Gender and equity dimensions: Women in informal/retail/home-based work, migrant women, and low-income households bear disproportionate burdens via reduced margins, unpaid care loads, nutrition risks, and potential reversals in girls’ education or maternal health.
The Indian government, the report says, taken steps such as reducing gas supplies to industries, maximising domestic LPG production for households, sourcing alternative crude/LNG imports, and exploring shifts to piped gas to ease import dependence. Though there have been reports of massive LPG shortage across the country, apart from the rise in fuel and fertiliser prices.
The full report (available via UNDP) includes these details in its impact analysis, transmission channels, and appendices with simulation tables.
