The West Asia crisis has been an energy-driven shock, with wide-ranging socio-economic impacts globally. strait of hormuz An important chokepoint, carrying about 38% of global crude oil, 13% of chemicals such as fertilizers and 2.4% of dry bulk cargo such as grains. Its volatility has far-reaching consequences beyond energy markets. For India, the disruption has exerted pressure on supply chains, macroeconomic indicators, manufacturing, trade deficit and living standards. As energy prices rise and Rupee The shock has spread across all sectors, reaching a new low. The impact of the crisis has increased the associated human costs. With rising fuel, input and freight costs, household incomes have declined, food security is at risk and public finances are strained.
The consequences of war on human livelihoods have been wide-ranging, including employment, purchasing power parity, food security, living standards, migration and other human development indicators. Although some immediate effects are already noticeable, others are likely to become apparent in the future. These long-term effects often limit individuals’ freedom of choice and hinder their optimal functioning. For India, the impact of the war is likely to be uneven, with the primary risk being borne by vulnerable groups such as women, youth and farmers.
The availability of fertilizers is deeply dependent on energy requirements, with West Asia being a major center of global fertilizer production, disruptions in the supply chain for fertilizers play a significant role. Examination For global food and agricultural supply chains. India belongs to the world Largest importer of urea and diammonium phosphate, making the sector highly import dependent and exposed to external shocks.
with approximately 43% Despite the number of people employed in the sector in 2025, agriculture still accounts for the largest share of employment in the country. The war has been damaging to farmers who already operate with low profit margins; The impact is drastic. Furthermore, rising fertilizer costs may force them to reduce their input use or switch to crops that require fewer inputs, often resulting in lower yields and incomes. For example, mango producer Andhra Pradesh, Telangana and Karnataka are facing price pressures as delays in export consignments are forcing them to resort to distress sales. Similarly, the value of exports of Basmati and non-Basmati rice has declined. 7.5% YoY in FY26. The increase in domestic supply of food grains and fruits has also increased financial concerns for farmers.
Amid the current crisis, fertilizer subsidy bill for FY27 is estimated to increase ₹70,000 crores To ₹2.41 lakh crore. This increase ensures availability of fertilizer for farmers but may ultimately have a lasting impact on public finances and subsequently affect consumer welfare.
When faced with such a crisis, the home becomes a shock absorber, and this often includes women and children. Bear The biggest loss. These disadvantages show their underlying impact through reduced nutrition, foregone medical care, disrupted schooling and increased unpaid care work. India’s female labor force participation rate is among the lowest globally and any gains in women’s paid employment could easily be wiped out by the shock. Additionally, as global food prices rise, the consequences for children dependent on school meal schemes have become clear. With the increase in the price of LPG cylinder, midday meal has been disrupted, and many village schools are facing the threat of poor nutrition, hunger and malnutrition, which can even result in school dropouts.
The Middle East and North Africa (MENA) region is emerging as a major destination for Indian female migrants. Currently, the Indian female migrant workforce stands at around 50 per cent 3.5 million. This migration trend, especially in the MENA region, has been significant and has been increasing for decades. However, the current crisis may lead to the return of migrant workers from West Asia, potentially reducing livelihood and employment opportunities for these women.
An Iran war could jeopardize India’s demographic advantage with its youth-oriented population. The Iran war puts it at risk because it impacts India through broader economic channels that are critical to youth opportunity: energy prices, food prices, fiscal space, industrial costs, MSME viability and job creation. India added to the shock of the Iran war with an already fragile employment situation. PLFS 2025 reflects youth unemployment, age 15-29, at 9.9%This compared to overall unemployment of 3.1% for persons aged 15 and over. Urban youth unemployment remained more than 13.6 percent. The shock also threatens rural non-agricultural jobs, especially in retail, repairs, logistics, construction, agri-services and small manufacturing sectors, where many youth are employed. India’s demographic dividend depends heavily on MSMEs as they are the main absorbers of workers working for the first time outside agriculture. The Iran war could weaken MSME employment due to inflation, tight working capital and weak consumer demand. A prolonged energy shock could force the government to spend more on fuel subsidies, fertilizer subsidies, food aid, strategic imports, shipping insurance or exchange-rate management, which could drain public finances on skills, public employment support, industrial clusters, apprenticeships, education quality and health. migration Due to rising prices of LPG, youth working in informal job sector from urban to rural areas may not only put a burden on the agriculture sector but may also lead to decline in job opportunities for the youth.
Measures to address the crisis for vulnerable groups should be both short-term shock absorption and long-term structural policy reforms. While policy measures have already been announced, in terms of securing farmers’ income, the government may prioritize the availability of urea and DAP and opt for direct benefit transfers instead of comprehensive schemes. This approach protects sowing decisions while reducing fiscal burden. Credit availability and interest subvention policies have already increased the collateral-free agricultural loan limits ₹from 1.6 lakh ₹Rs 2 lakh to support farmers struggling with high input costs. This can be further augmented by interest subsidy for seed, fodder and irrigation expenses during the crisis. States can activate transport subsidies for perishable commodities like vegetables, fruits, milk, poultry and fish. Additionally, they can extend their support to farmer producer organizations (FPOs), self-help groups (SHGs) and other farmer groups to strengthen fertilizer procurement, negotiate transportation rates, access warehouse receipts, and link farmers to institutional buyers. Long-term solutions may include investment in storage cold chains and local processing facilities. Incentives for a shift to green fertilizers and renewable-linked inputs can meet the dual agenda of reducing dependence on chemical fertilizers and shifting to nature-based solutions.
For women, extended SHG-based credit and livelihood support can offer low-interest working capital, emergency consumption loans, nutrition kits and livelihood grants. protect Anganwadi Budgetary deviations from nutrition, school meals, maternal health services and community child care are significant. Long-term job security can be achieved through employment opportunities and private sector collaboration to boost job prospects for migrant women returning from the Middle East.
For the youth, employment linked incentive scheme can be a counter shock tool by giving priority to MSMEs, logistics, food processing, renewable energy, repair services, agro-processing and manufacturing clusters. It requires large companies, PSUs, industrial parks and MSME clusters to host salaried trainees in manufacturing, logistics, food processing, green energy and digital services. An employment success package program, similar to that offered by South Korea, could provide tailored job search assistance and training to enhance employability.
The West Asia crisis is another stark reminder to develop shock-response mechanisms that are disproportionately faced by vulnerable populations. The architecture for structural policy changes and contingency measures needs to be organized more than ever.
(Views expressed are personal)
This article is written by Shruti Jain, Associate Fellow, Center for Development Studies, Observer Research Foundation (ORF), New Delhi.
