New Delhi, June 20: Middle East tensions significantly impact India’s economy and its common man due to India’s heavy reliance on the region for energy, trade, and remittances. Below is a detailed analysis of these impacts based on available information:
Impact on India’s Common Man
Rising Fuel Prices and Inflation:
♦India imports about 85% of its crude oil, with a significant portion (over 60%) coming from Middle Eastern countries like Saudi Arabia, Iraq, and Qatar. Escalating tensions, such as the Israel-Iran conflict or disruptions in the Strait of Hormuz, can spike global oil prices. For instance, a $10 per barrel increase in oil prices could raise India’s consumer price index (CPI) inflation by 0.4 percentage points.
♦Higher oil prices directly increase the cost of petrol, diesel, and LPG, which are essential for transportation and cooking. This raises the cost of living for the common man, as fuel price hikes lead to increased prices for goods and services, including food and transport.
♦For example, in June 2025, Brent crude surged over 12% to near $78 per barrel due to Israel-Iran tensions, threatening to weaken the Indian rupee and fuel inflation.
Impact on Food and Agriculture:
♦Middle East tensions can disrupt fertilizer supplies, as the region is a key source of fertilizers for India. Any supply chain disruption or price increase in fertilizers raises agricultural input costs, which can lead to higher food prices, affecting the common man’s household budget.
♦Rural households, heavily reliant on LPG for cooking, would face increased costs if energy prices rise due to supply chain disruptions.
Impact on Remittances and Jobs:
♦Around 9 million Indians work in Gulf countries, contributing significantly to India’s economy through remittances (approximately $100 billion annually). Prolonged conflicts could disrupt jobs, reduce incomes, or force workers to return home, impacting families dependent on these remittances.
♦Safety concerns for Indian workers in the Gulf could also arise if tensions escalate, adding emotional and financial stress to families.
Rising Gold Prices:
♦Geopolitical tensions often drive investors to safe-haven assets like gold, pushing up prices. In June 2025, domestic gold futures in India crossed ₹1 lakh per 10 grams, partly due to Middle East tensions. This impacts the common man, particularly during festive seasons, as gold jewellery becomes costlier, potentially reducing demand and affecting household savings.
Middle East tensions, particularly conflicts involving key oil producers like Iran, could significantly impact India’s common man through higher fuel and food prices, reduced remittances, and increased living costs.
While India’s economy has shown resilience, prolonged or severe conflicts could exacerbate these challenges, requiring proactive policy measures to protect both the common man and economic stability.
The exact impact depends on the scale and duration of the conflict. For instance, a prolonged closure of the Strait of Hormuz could have catastrophic effects, potentially triggering a global recession with a severe impact on India.