A United Nations report has warned that escalating conflict in West Asia could push up to 2.5 million people in India into poverty and slow the country’s human development progress.
The United Nations Development Programme, in its report titled “Military Escalation In The Middle East: Human Development Impacts Across Asia And The Pacific,” said the crisis is widening development pressures across the region through rising fuel, freight, and input costs.
It said these shocks are reducing household purchasing power, increasing food insecurity, straining public finances, and weakening livelihoods.
The preliminary assessment, released Tuesday, estimates that 8.8 million people globally could fall into poverty due to the conflict, with the Asia-Pacific region facing economic losses of up to $299 billion.
In India, poverty levels are projected to rise from about 400,000 to nearly 2.5 million people. The report estimates the poverty rate could increase to 24.2% from 23.9%, pushing around 2.46 million people into poverty and raising the total number of people living in poverty to over 354 million.
South Asia is expected to bear the largest share of the global increase in poverty, ranging from about 1.7 million to over 8 million people across different scenarios.
The report also warned of a setback in human development gains. India could lose between 0.03 and 0.12 years of Human Development Index progress, while Iran may see a decline equivalent to one to one and a half years.
India’s heavy dependence on West Asia for energy and inputs makes it particularly vulnerable. The country imports over 90% of its oil, with more than 40% of crude and 90% of LPG coming from the region. West Asia also supplies over 45% of India’s fertiliser imports, and most domestic urea production depends on imported gas.
Rising LNG prices have already pushed India and other countries to increase reliance on coal-fired power.
Trade disruptions are also significant, with West Asia accounting for 14% of India’s exports and 20.9% of imports. Freight surcharges, route diversions, and delays are affecting shipments, including key exports such as basmati rice, tea, gems and jewellery, and apparel.
The report highlighted risks to food security, especially as any prolonged disruption could affect preparations for the Kharif cropping season starting in June. While current urea stocks offer a short-term buffer, sustained disruption could impact agriculture.
Remittances are another concern. India has around 9.37 million citizens in Gulf countries, contributing 38 to 40% of total inward remittances. Any slowdown in Gulf economies could reduce these inflows and affect household incomes.
Employment risks are expected to rise, particularly in MSME sectors dependent on imported energy or Gulf-linked trade. With about 90% of India’s workforce in informal employment, small businesses in sectors such as hospitality, construction materials, food processing, and gems and diamonds could face higher costs, supply shortages, and order disruptions.
The report also noted rising costs in healthcare, with raw material prices for medical devices expected to increase by around 50% and wholesale medicine prices already up by 10 to 15%.
UNDP said countries could mitigate long-term impacts by strengthening social protection systems, diversifying energy and food sources, and building more resilient supply chains.