The recent Gulf War has unsettled global energy markets, disrupted shipping routes, and shaken investor confidence. For India, heavily dependent on Gulf energy imports and remittances from millions of Indian workers in the region, the shockwaves are immediate: rising fuel costs, a weakening rupee, volatile stock markets, and widening trade deficits. These pressures expose the fragility of our economy and magnify risks already looming from within ~ slowing growth, layoffs in industry, and an energy shortage that was long anticipated but insufficiently addressed.
The Sensex has swung wildly in recent weeks, reflecting nervous capital markets. In the last week of April, it fell by over 750 points, part of a broader 7 per cent decline this fiscal year. The rupee, meanwhile, has slipped to little more than Rs 95 against the dollar, its weakest level in months. This decline is not merely a number on a currency chart; it reflects deeper vulnerabilities ~ dependence on imports, capital outflows, and the absence of strong export competitiveness. India’s trade deficit has widened to $119 billion, with a record $112 billion imbalance with China alone. These figures underline how external shocks like the Gulf War quickly translate into domestic strain. Yet the most worrying consequence lies in the social sphere.
India’s demographic dividend – the promise of a young workforce powering growth ~ risks turning into a demographic disaster. Youth unemployment is rising sharply: nearly 40 per cent of graduates under 25 remain jobless, and urban female youth unemployment has touched 26 per cent. Uttar Pradesh, India’s most populous state, illustrates the crisis vividly. Young men and women spend their days drifting aimlessly, not for lack of ambition but for lack of opportunity. Degrees are plentiful, but employable skills are scarce. The education pipeline is riddled with flaws.
Mushrooming coaching centres, fake institutions, and staggering capitation fees in medical and engineering colleges have eroded quality. Policies have not kept pace with global skill demands. Graduates emerge with certificates but not competencies, widening the gap between job seekers and available jobs. India adds five million graduates annually, but only 2.8 million graduate-level jobs are created. The mismatch is glaring, and the frustration it breeds is dangerous. The Gulf War shockwaves have made this mismatch more visible. Rising energy costs squeeze industries, leading to layoffs. Volatile markets deter investment, limiting job creation. A weak rupee makes imports costlier, straining households and businesses alike.
In this environment, idle youth become not just an economic statistic but a social challenge. Civic indiscipline, migration pressures, and unrest are natural spillovers when aspirations collide with stagnation. The system itself reveals the deeper fault lines. Infrastructure has not kept pace with the demands of climate stress and economic volatility. Priorities in governance have often been misplaced, focusing on short term optics rather than long term resilience. An unresponsive bureaucracy, more eager to oblige than to innovate, has compounded the problem. Education policy remains fragmented, allowing mushrooming coaching centres, fake institutions, and staggering capitation fees to flourish unchecked.
These are not isolated lapses but structural weaknesses that have left India exposed. The Gulf War has not created the crisis; it has merely magnified vulnerabilities already embedded in our governance and institutions. Consider the contrast with China. Despite its dependence on imported oil, China has devised effective routes and tailored foreign policy to secure supplies. In most other sectors, it is nearly self-sufficient ~ from steel and electronics to chemicals and consumer goods. By empowering smaller industrial bases and investing in manufacturing quality and competitiveness, China has offset global shocks and built resilience.
South Korea, too, turned its demographic dividend into a growth engine by aligning education with industry needs, creating vocational pipelines, and investing in technology. India has shown that self sufficiency is possible ~ the Green Revolution made us food secure, and the White Revolution made us the world’s largest milk producer. These successes prove that with foresight and policy alignment, India can achieve resilience. Yet in manufacturing and energy, we are yet to replicate this model. Smaller industrial bases were not empowered to produce quality, competitive goods.
Instead, we remained dependent on imports, widening our trade deficit and weakening the rupee. The Gulf War has exposed this weakness brutally, reminding us that resilience cannot be built overnight. The cotton and textile industry offers another telling example of missed opportunities. India has long been one of the world’s largest producers of cotton, yet countries like Bangladesh and Vietnam have captured greater access to global markets. Their advantage lies not in raw material but in cost efficiency, quality control, and disciplined labour practices. Bangladesh’s garment exports crossed $45 billion in 2025, while India’s stagnated despite having a larger cotton base.
Vietnam, with far fewer resources, has built a reputation for consistent standards and competitive pricing. The Gulf War has made global markets more volatile, but this should have been the moment for India to showcase perfection in its products. Instead, failing standards, poor finish, and higher costs have eroded competitiveness. The lesson is clear: without seriousness in training and inculcating discipline ~ so woefully lacking among our youth ~ India cannot offset global shocks. Every weakness in quality and skill is magnified by the turbulence unleashed by the Gulf crisis. The consequences are already visible. In Uttar Pradesh, Bihar, and Rajasthan, youth unemployment fuels migration to metros, where overcrowding and informal work deepen fragility.
In urban centres, graduates with degrees in engineering or medicine struggle to find jobs that match their training, while industries complain of skill shortages. This paradox ~ educated youth without jobs, and industries without skilled workers ~ is the hallmark of a system that has failed to connect education with employment. The wastage of India’s women is another silent crisis. Female literacy has risen, yet female labour force participation remains stuck at around 23 per cent, among the lowest in Asia. Millions of educated women remain outside the workforce, constrained by social barriers, safety concerns, and inadequate childcare. This is not just a loss of individual potential but a weakening of national resilience. China and South Korea harnessed women’s participation as a central pillar of their demographic dividend.
India, by contrast, risks wasting half its talent pool at precisely the moment when global competition demands inclusion. There are also practical avenues where youth energy can be channelled productively. Recycling initiatives, river cleaning, and conservation can combine employment with ecological revival. Small scale industries already contribute nearly 30 per cent of GDP and employ 110 million people. Empowering youth in manufacturing, handicrafts, and agro processing can absorb surplus labour and reduce migration pressures. The Gulf War has also exposed India’s energy vulnerability. Rising oil prices strain the economy, while dependence on Gulf imports leaves us at the mercy of external shocks. Renewable energy investments remain inadequate, and gas shortages threaten industrial output. Without diversification, India’s rupee will remain weak, its trade deficit wide, and its job creation limited. What is needed now is a far-sighted response.
Vocational and technical education must be strengthened and aligned with emerging sectors like renewable energy, digital tools, and artificial intelligence. A single common language for skills ~ English ~ must be adopted without hesitation to ensure global competitiveness. Discipline must be instilled among youth, with skill training channelizing their strength to confront the economic crisis magnified by the Gulf War. Private institutions must be regulated to curb fake colleges and capitation fees, while industry-academia collaboration must deepen to make graduates employable.
Energy diversification is critical: investing in renewables and reducing dependence on Gulf imports will stabilize both the rupee and the job market. Infrastructure must expand beyond metros to disperse opportunities, and women must be included fully in the workforce with safety, childcare, and equal opportunity as priorities. At the same time, India’s bureaucracy and political leadership must shed extravagance, security layers, and colonial distance, professing before preaching and restoring values of honesty, hard work, and austerity. India’s demographic dividend is a one-time window.
If wasted, it will become a demographic disaster, magnified by external shocks like the Gulf War. The challenge is not only economic but social ~ resilience depends on foresight and discipline. Unless we act decisively, the promise of youth will remain unfulfilled, and the crisis will deepen. As Zig Ziglar famously said, “You don’t have to be great to start, but you have to start to be great.”
(The writer is a retired Air Commodore, VSM, of the Indian Air Force)