The first sign of trouble for migrant worker Sadlu, 21, was in the makeshift kitchen in a tiny room he shared with six other migrants in Surat city in western Gujarat state.
The supply of cooking gas became erratic in mid-March, with prices increasing fourfold at one point, as a distant war in Iran disrupted India’s energy supplies from the Persian Gulf, affecting Indian homes like his.
Then rumours of a lockdown due to low energy supplies started circulating on the floor of the textile processing plant where he worked.
Alarmed by the uncertainty, his mother insisted that he and his brother, who was also in the same industry, immediately return to their home town in Prayagraj district in Uttar Pradesh state, some 1,400km away.
On March 27, Mr Sadlu, who goes by only one name, followed in the wake of his brother, who had left a day earlier, packing his meagre belongings, even though it meant losing about 500 rupees (S$6.90) in daily wages.
“My mother insisted I should come home. And also, I was wondering how I would buy gas at such a high price. I didn’t want to come back to the village,” he said over the phone from his village in Uttar Pradesh.
An urban-to-rural migration trickle has started in India, a ripple effect of Iran’s closure of the Strait of Hormuz, through which one-fifth of the world’s daily supply of oil and gas used to flow, due to Iran’s conflict with the United States and Israel, disrupting global energy supplies.
It is not a mass exodus such as the one that took place during the Covid-19 pandemic in 2020, when hundreds of thousands of migrant workers, many walking for hundreds of kilometres, went home after the government imposed a lockdown.
This time, it is a slow trickle from cities where industries have been affected by the energy crisis or people find themselves unable to cook food.
This migration is not large, but if it persists, it is expected to strain a rural economy already beset with problems and likely to be hurt by rising fertiliser prices also caused by the Iran war.
The most visible part of this migration is at train stations, where long queues of migrants can be seen, waiting patiently to board trains.
While the government is absorbing the price increase for domestic gas use, many migrants, who lack proper documentation, often depend on an informal market, where gas prices have risen. Hoarding and black marketeering are contributing to the price jump.
Long queues can be seen at cylinder gas vendors in different parts of India, with residents complaining about how they are forced to wait for hours to get cooking gas.
Some have resorted to cooking food over wood stoves and others over induction stoves, which are selling out fast.
In Surat, which is a magnet for migrant workers from poorer states such as Odisha, Bihar and Uttar Pradesh, factories dependent on liquified petroleum gas – particularly those in textiles, ceramics and small manufacturing – are shutting down or running at reduced capacity owing to supply shortages, bleeding money as a result.
This is because gas for commercial use, such as in restaurants and factories, does not enjoy the same government subsidies.
“We are looking at up to 10 million rupees in losses every day,” said Mr Ashok Jirawala, president of the Federation of Gujarat Weavers’ Welfare Association and owner of a textile and fabric factory in Surat.
Some 150,000 workers, or 30 per cent of the workforce in Surat’s textile industry, have returned home as factories cut back from operating seven days a week to five, he added.
The crisis has underlined how critical it is for India to have uninterrupted energy and the importance of informal labour to growth.
The fallout, if the Iran war persists, is expected to be on consumption and further deepening of existing fault lines in the Indian economy: weak job creation, rising cost of living, and stagnant incomes.
Even before the Iran conflict, signs of rising inflation were apparent. The February 2026 consumer price index went up to 3.21 per cent, from 2.74 per cent in January – an 11-month high.
Eurasia Group, an American political risk consulting firm, estimates that India, along with Turkey, faces the greatest inflation shock from the increase in energy prices caused by the Iran war. It noted that both these countries are enacting policies to shield consumers from higher prices, but both are constrained by rising pressure on their currencies.
Consumption is a key driver of the Indian economy, which was forecast before the Iran war to grow at 7.4 per cent to 7.6 per cent for the financial year 2025-26. Recent estimates suggest a potential downward revision of around 1 percentage point.
Professor of economics Deepanshu Mohan at O.P. Jindal Global University said: “The real invisible tax of this shock will be on the consumption end; people will be forced to make choices in terms of consuming less, particularly lower- and middle-income households.”
Back home in his village, Mr Sadlu feels secure but the threat of financial instability is giving him sleepless nights.
“I have enough savings for our meals but not for anything else, and that, too, for a few months. There are no jobs here,” he said.
“I will have to go back but I don’t know when I can.”
Rural economies are already struggling to generate jobs, particularly in poorer states such as Uttar Pradesh, Odisha and Bihar, which are the largest sources of migrant workers in India.
Initiatives like the National Rural Employment Guarantee Scheme provide 125 days of paid work in addition to other schemes, such as one providing subsidised grain, which offset the pain, but only partially.
Job opportunities remain scarce.
Mr S. Irudaya Rajan, chair of the International Institute of Migration and Development, said: “We have to strengthen the rural economy. We talk about smart cities; we should talk of smart villages.”
The strain on the rural economy could be further compounded by disruptions to fertiliser supply.
Farmers are apprehensive as they prepare to buy fertilisers in May for the June-to-July sowing season, despite assurances from the government that there would be no shortages of subsidised fertilisers.
Nearly half of the urea used in India, the world’s second-largest fertiliser consumer after China, comes from Qatar, where output has gone down due to Iran’s strikes on a key gas plant there.
As India is one of the world’s largest food producers, exporting everything from rice to pulses to fruit, disruptions to its farming industry would have a global impact.
Another blow to the economy as a result of the Iran conflict is that of Indians returning home from jobs overseas.
Since March 2026, more than 244,000 Indian nationals, including blue-collar migrant workers, have returned home from the Gulf countries, threatening the annual remittance source of US$40 billion (S$51.5 billion), a part of household stability and foreign exchange.
The longer the Iran conflict continues, the greater the pressures that are expected on the Indian economy.
Amid all this, many migrants continue to wonder if they should stay or go back home.
In Surat, Mr Naseem Khan, a factory supervisor with five children, has made contingency plans if the factory he works at shuts down. Already, half of the plant’s workers have gone home.
“I have decided I will first send my five children and wife home. If I stop earning, how will I feed them?” said Mr Khan, a Uttar Pradesh native who has lived in Surat since 2003.
“If the worst comes to the worst, I have a little land in Uttar Pradesh; I will go back and become a farmer.”
The Straits Times
