US-Iran war may push 25L Indians into poverty, says UN
What's the story
The ongoing conflict in West Asia could push as many as 2.5 million people in India into poverty, a report by the United Nations Development Programme (UNDP) has warned. The study, titled Military Escalation In The Middle East: Human Development Impacts Across Asia And The Pacific, highlights how the crisis is "widening human development pressures across Asia and the Pacific."
Economic repercussions
Conflict affecting household purchasing power
The UNDP report highlights that the ongoing conflict is affecting household purchasing power, increasing food insecurity, straining public budgets, and also weakening livelihoods. The global poverty could rise by some 8.8 million people due to the West Asia military escalation. In India alone, this could see an increase in poverty from around 400,000 to as many as 2.5 million people.
Development impact
Loss in HDI progress
The report projects a loss of about 0.03-0.12 years in India's Human Development Index (HDI) progress due to the conflict. India meets over 90% of its oil needs through imports, with over 40% of crude imports and 90% of LPG imports coming from West Asia. The shock from the conflict is also affecting energy choices in several countries, including India, Thailand, Philippines, and Vietnam who are increasingly relying on coal-fired power as LNG prices rise.
Trade impact
Impact on trade and supply chains
UNDP highlights significant impacts on trade and supply chains in 25 out of 36 countries due to freight surcharges, war-risk insurance premiums, route diversions, and also delayed delivery of intermediate and consumer goods. In India, West Asian markets account for 14% of exports and 20.9% of imports with some $48 billion in non-oil exports such as basmati rice, tea, gems, jewelry, and apparel.
Concerns
Remittance losses could aggravate food security pressures
The UNDP report warns that food security pressures could also be aggravated by remittance losses, as reduced Gulf economic activity weakens the household incomes and purchasing power. India has the largest absolute exposure to Gulf labor markets with 9.37 million Indians living in GCC nations as of October 2024, sending about 38-40% of India's inward remittances.