In an alarming report, the United Nations Development Programme (UNDP) has claimed that the ongoing military conflict in West Asia is likely to push over 2.5 million people into poverty.
Titled Military Escalation in the Middle East: Human Development Impacts Across Asia and the Pacific, the report highlights that the conflict between the United States and Iran poses significant risks to economic stability and human development across Asia and the Pacific, particularly through its effects on energy markets, trade, and global financial conditions.
The poverty rate in India is expected to rise from approximately 400,000 to 2.5 million, according to the report. Iran is projected to experience the largest increase, with the number of people living in poverty rising from about 1.2 million to over 5 million.
Globally, the report claims that the number of people pushed into poverty could rise from approximately 1.9 million to nearly 8.8 million across various scenarios, with South Asia accounting for the largest share—ranging from about 1.7 million to over 8 million.
While Pakistan’s poverty level is likely to increase from about 73,000 to over 420,000, China is estimated to experience a more moderate increase—from around 115,000 to over 620,000.
India has already been facing the war’s ripple effects on energy markets. The report notes that India meets over 90 per cent of its oil needs through imports, sourcing more than 40 percent of crude imports and 90 per cent of LPG imports from the Middle East.
The disruption in trade and supply chains has also impacted the country. West Asian markets account for 14.0 per cent of India’s exports and 20.9 per cent of its imports. West Asian countries supply over 45 per cent of India’s fertilizer imports, while 85 per cent of the country’s domestic urea production depends on imported regasified liquefied natural gas.
The report also notes that any prolonged disruption would coincide with India’s preparations for the Kharif season, which begins in June. Urea stocks stood at 6.114 million tons, providing a near-term buffer, but not fully insulating the sector if disruptions persist into the planting season.
"For several countries, including India, Pakistan, Bangladesh, Nepal, and the Philippines, food security pressures could also be compounded by remittance losses, as reduced Gulf economic activity weakens household incomes and purchasing power," the report states.
According to the report, the scale of direct exposure to Gulf labor markets and remittance flows is substantial and consequential for many countries. As of October 2024, the Ministry of External Affairs states that 9.37 million Indians reside in Gulf Cooperation Council (GCC) countries, sending about 38-40 percent of India’s inward remittances.
The UNDP report also predicts that India is likely to experience a loss of approximately 0.03 to 0.12 years of Human Development Index (HDI) progress.
The military conflict is also expected to take a toll on the health sector. In India, the report says, raw material costs for medical devices are expected to rise by around 50 per cent due to disruptions around the Strait of Hormuz, while wholesale prices of medicines have already risen by 10-15 per cent.