As geopolitical tensions escalate in West Asia, India could see about 2.5mn (million) or 25 lakh people pushed into poverty, alongside a measurable setback to its human development progress, according to a new assessment by the United Nations Development Programme (UNDP).
The
UNDP report warned that the ongoing conflict is already transmitting economic shocks across Asia and the Pacific, noting that “the military escalation in the Middle East is widening human development pressures… through higher fuel, freight, and input costs, the shock is diminishing household purchasing power, raising food insecurity, straining public budgets, and weakening livelihoods.”
According to Kanni Wignaraja, UN assistant secretary-general and UNDP regional director for Asia and the Pacific, the strain this war is placing across Asia-Pacific is already visible and it is reaching households faster than policy can adjust. "Despite the recent ceasefire, the resulting prolonged volatility in global markets is imposing increasingly difficult trade-offs between stabilising prices, supporting vulnerable households, and maintaining essential public services and market investments. 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," Ms Wignaraja says.
India among Most Affected in South Asia
The report identifies South Asia as the most vulnerable sub-region, with India expected to account for a significant share of the projected rise in poverty. Under a severe scenario, India alone could see around 2.5mn people pushed below the poverty line, reflecting both its large population base and exposure to global price shocks.
Even under less severe conditions, the country is expected to witness a noticeable increase in poverty levels, driven by rising living costs and weakening income growth.
Human Development Gains at Risk
Beyond poverty, the report flags a setback to India’s broader human development trajectory. The country is projected to lose about 0.03 to 0.12 years of progress in its human development index (HDI), a composite measure of income, health and education outcomes.
While the losses may appear modest in numerical terms, the report notes that they represent weeks to months of foregone development progress and could worsen if disruptions persist.
Energy Shock at the Core
A key driver of the impact on India is its heavy dependence on imported energy. The report highlights that the country meets over 90% of its oil requirements through imports, with a large share sourced from the Middle East.
This makes India particularly vulnerable to disruptions in the Strait of Hormuz, a critical global energy corridor through which a majority of oil supplies to Asia pass.
As oil prices surged by about 25%–30% during the early phase of the conflict, the impact quickly fed into domestic inflation, increasing transport, electricity and food costs.
Food and Fertiliser Risks
The report also underlines risks to food security in India. West Asian countries account for over 45% of India’s fertiliser imports, while a large share of domestic fertiliser production depends on imported gas.
Disruptions in supply chains, combined with rising input costs, could increase agricultural costs and push up food prices, particularly affecting low-income households that spend a higher proportion of their income on essentials.
Trade and Remittance Exposure
India’s economic exposure to the region extends beyond energy. West Asia accounts for about 14% of India’s exports and over 20% of imports, making trade flows vulnerable to disruptions caused by higher freight costs and shipping delays.
In addition, nearly 9.4mn Indians work in Gulf countries, contributing a substantial share of remittance inflows. Any slowdown in these labour markets could have a direct impact on household incomes in India, particularly in states dependent on remittance flows.
Regional Ripple Effects
Across Asia and the Pacific, the report estimates that about 8.8mn people could be pushed into poverty, while output losses could range between US$97bn (billion) and US$299bn, equivalent to up to 0.8% of regional gross domestic product (GDP).
Low-income households, informal workers, migrants and small businesses are expected to bear the brunt of the shock, with women identified as particularly vulnerable across these groups.
Policy Response and Constraints
Governments across the region, including India, have already begun responding through measures such as fuel price stabilisation, subsidies and efforts to diversify energy sources. However, the UNDP report cautions that these measures are placing additional strain on public finances.
As the crisis persists, policymakers may face difficult trade-offs between controlling inflation, supporting vulnerable populations and maintaining investments in health, education and infrastructure.
A Broader Development Challenge
UNDP emphasises that the current crisis is not merely an economic shock but a broader test of resilience for countries in the region. Prolonged volatility in global markets could reverse years of progress in poverty reduction and human development if not managed effectively.
The report calls for strengthening social protection systems, supporting livelihoods, diversifying energy and food supply chains, and enhancing regional cooperation to mitigate future shocks.
