When energy crisis meets climate stress: The invisible burden on India’s informal workers

The West Asia conflict has now crossed more than two and half months and there has been no resolution between the conflicting nations. The closure of the Strait of Hormuz has brought global attention to oil and energy security and geopolitical vulnerability. All nations have been hit by the closure or disruptions in the Strait of Hormuz, and India is not alone. For India, the question is not just about geopolitical relations or international conflict or rising crude oil prices. It is rather structural in nature and goes beyond macro-economic indicators.

The current discourse around the effects of this conflict is focused on inflation, fuel prices, LPG supply, market volatility, and trade deficits. While these issues are important, such analyses often overlook a critical dimension which is the ‘disproportionate impact’ of energy shocks on informal workers and livelihood systems that are vulnerable.

India is a country where a significant proportion of the workforce operates within this informal economy. This proportion of the workforce experiences energy insecurity through rising transport costs, reduced earnings, food inflation, and physical exhaustion, reduced mobility, and increased economic insecurity and uncertainty.

The disruptions in the Strait of Hormuz and the West Asia war should therefore be understood not only as a geopolitical issue or an energy crisis issue, but also as a labour, livelihood, and social justice issue. 

The burden posed by this energy crisis is unequal in our society. For middle- and upper-income groups, fuel inflation may primarily translate into increased household expenditure. For informal workers, however, energy shocks directly threaten their occupation and hence their survival. Street vendors, daily wage workers, delivery personnel, construction labourers, small transport operators, waste pickers, and micro-entrepreneurs function within extremely narrow economic margins. Many rely on daily cash flows with little savings, limited social protection, and no income security. In such conditions, even a small increase in fuel prices or food prices or commute expenses can significantly destabilize household economies. Unlike formal sector employees, informal workers have no means to transfer rising costs onto employers or negotiate wage revisions. Their incomes remain largely stagnant while living costs rise rapidly. This creates a form of silent economic compression, where workers continue to remain economically active but experience declining real incomes and worsening conditions of life. In essence, the informal economy as such continues to thrive, but individual and households have to bear the brunt of this crisis. This is therefore not just about employment and livelihoods but centres more around quality and sustainability of livelihoods of informal workers under conditions of systemic volatility. 

The West Asia war and its related effects are also unfolding at a time when India is already grappling with the intensifying realities of climate change. This intersection is significant as climate vulnerability and energy insecurity reinforce one another, specifically within informal economies. Climate change has already altered the environmental conditions under which people work, live, and travel. Erratic rainfall, heat waves, and rising average temperatures are already a reality for many Indian cities which translates to worsening physical and economic vulnerabilities for informal workers. Climate change further increases energy demand as well. Cities are experiencing growing dependence on cooling systems thereby straining energy supplies. In such a context, geopolitical disruptions affecting fuel supply chains become even more economically destabilising. A vendor operating a food cart on the streets is dealing with increasing temperature or erratic rainfall affecting the number of customers visiting his cart. Moreover, rising LPG prices are making cylinders unaffordable. This directly affects his daily income and the economic dynamics of his/ her family. 

Climate change also magnifies the social consequences of inflation. Rising prices and expenses disproportionately affect the lower income households. Informal workers directly absorb these shocks either through reduced consumption or through increased physical or financial strain (in the form of debt) in the absence of any social security. 

It is also worth noting that within these informal economy households, such crises deepens existing gender inequalities. Women often bear the brunt of such crisis more than the men. Women carry additional invisible burden in the form of managing already scarce resources, negotiating inflation, and balancing unpaid labour alongside income generating work.

From a policy standpoint, climate resilience and energy resilience cannot be treated as separate policy domains. In a country like India, where a major chunk of the population depends on informal livelihoods, energy and climate shocks function as social and economic shocks.  

The Strait of Hormuz crisis has revealed that global geopolitical conditions do not remain distant events for countries like India. The effects of such crisis travel quickly into everyday lives – especially of people who are already living with economic insecurity. Conversations around the West Asia conflict and the disruptions in the Strait of Hormuz often focus on oil reserves and import routes. Far less attention is on the people who quietly absorb the consequences of these disruptions amid climatic disruptions.

It is about that India focuses not only on securing energy supplies bit also on building systems that can protect livelihoods of people. At a time when climate stress, economic instability and geopolitical disruptions are becoming more common, we need and policies and systems in place which do not place these issues in silos, but rather tackle these as interconnected issues.