Conflict and military escalation in West Asia threatens to plunge 2.5 million people in India into poverty, and according to United Nations estimates and projections, the country is expected to suffer some loss in human development progress.
In a report titled “Military Escalation in the Middle East: Human Development Impacts in Asia and the Pacific,” the United Nations Development Program said the conflict is “extending pressures on human development in Asia and the Pacific.
Through higher fuel, transport and input costs, this shock reduces household purchasing power, increases food insecurity, strains public budgets and weakens livelihoods.”
A preliminary assessment released on Tuesday estimated that 8.8 million people worldwide are at risk of poverty and that military escalation in West Asia could cost the Asia-Pacific region up to US$299 billion.
In India, poverty is expected to increase from around 400,000 to 2.5 million, the report said.
He added that the number of people pushed into poverty globally as a result of conflict rises from around 1.9 million to nearly 8.8 million across scenarios, with South Asia accounting for the largest share, ranging from around 1.7 million to more than 8 million, reflecting both the subregion’s population size and its greater exposure to income and price shocks.
China is estimated to experience a more modest increase in the number of people at risk of poverty, from around 115,000 to more than 620,000, reflecting small proportional changes applied to a very large population base.
The report highlights the estimated poverty impact of a military escalation (28-day conflict, most severe scenario with 8-month adjustment) and states that India’s poverty rate is estimated to be 24.2 percent post-crisis, up from 23.9 percent, pushing 2,464,698 people into poverty. An estimated 354,033,698 people will be living in poverty in the country after the crisis, compared to 351,569,000 before the crisis.
A UNDP simulation estimates the impact of conflict on the Human Development Index (HDI) for countries across the region. It shows that Iran’s HDI could decrease by an amount equivalent to roughly one to one and a half years of human development progress.
“India is expected to experience a loss of around 0.03-0.12 years of HDI progress, followed by Nepal at around 0.02-0.09 years and Vietnam at 0.02-0.07 years, while for China the estimated HDI impacts remain limited at around 0.01-0.05 years,” the report said.
Among the largest importers in the region, India meets more than 90 percent of its oil needs through imports, with more than 40 percent of crude oil imports and 90 percent of LPG imports coming from West Asia, the report said. In addition, West Asian countries supply more than 45 percent of India’s fertilizer imports
85 percent of the country’s domestic urea production depends on imported regasified liquefied natural gas.
Conflict shock also affects energy choices in several countries. As LNG prices rise, some economies, including India, Thailand, the Philippines and Vietnam, have increased their reliance on coal-fired power.
In terms of trade and supply chain disruptions, UNDP’s country-level analysis showed a significant impact in 25 out of 36 countries through freight surcharges, war risk insurance premiums, route diversions and delayed deliveries of intermediate and consumer goods.
India estimates that West Asian markets account for 14 percent of exports and 20.9 percent of imports, with about $48 billion of non-oil exports, mainly basmati rice, tea, gems, and jewelry and clothing. Bangladesh is also reporting significant disruption as Gulf carriers canceled flights and shipments from Bangladesh and India were stranded, it said.
The report highlights the impact of military escalation on food security, stating that “in several countries, including India, Pakistan, Bangladesh, Nepal and the Philippines, food security pressures could also be associated with remittance losses as reduced economic activity in the Gulf weakens household incomes and purchasing power.”
“In India, the timing is particularly sensitive: any longer disruption would coincide with preparations for the Kharif (monsoon harvest season), which begins in June. Urea stocks stood at 6.114 million tonnes, providing a short-term buffer but not fully insulating the sector if disruptions persist into the planting season,” it said.
The report also notes the impact of the conflict on remittances and migrant workers.
“For several countries, the extent of direct exposure to Gulf labor markets and remittance flows is both substantial and consequential,” the report said.
“India has the largest absolute exposure,” it said, citing Ministry of External Affairs data that in October 2024, there were 9.37 million Indians living in Gulf Cooperation Council (GCC) countries, sending about 38-40 percent of India’s remittances.
Military escalation affects employment and livelihoods across the Asia-Pacific region through disruptions to economic activity, mobility, trade and supply chains.
“In India, employment risks are likely to be particularly pronounced in MSME-intensive sectors that rely on imported energy and inputs or are exposed to Gulf-linked trade. This is particularly significant in the labor market, where about 90 percent of employment is informal.”
“Small businesses in the hospitality, food processing, construction materials, steel and gems and diamonds industries may face higher input costs, supply shortages and delayed or canceled orders with knock-on effects on jobs, hours worked and business continuity. These pressures could translate into reduced working hours, job losses and business disruptions, particularly for informal and migrant workers and SMEs operating with limited access to credit.
In India, raw material costs for medical devices are also expected to rise by around 50 percent due to disruptions around the Strait of Hormuz, while wholesale drug prices have already risen by 10-15 percent.
“At the same time, we see important opportunities for countries to accelerate long-term resilience through adaptive social protection, stronger local and regional value chains, and diversified energy and food systems,” said UN Under-Secretary-General and UNDP Regional Director for Asia and the Pacific Kanni Wignaraja.
