A perfect storm of geopolitical crisis and policy paralysis is pushing India’s poorest into a devastating double-bind. The ongoing war in Iran has sent shockwaves through global oil markets, and as LPG prices skyrocket and factory slowdowns ripple across urban centers, a massive exodus of migrant workers is underway.
But for millions fleeing the city’s hardships, the safety net of rural employment has all but vanished, leaving them stranded without work or income, says a detailed report prepared by the NREGA Sangharsh Morcha, a coalition of NGOs and unions, quoting individual migrants.
The conflict in West Asia has triggered a severe energy shock. India, which gets over 90% of its LPG via the Strait of Hormuz, is feeling the heat acutely. The price of a 19-kg commercial LPG cylinder in Delhi has surged, with reports of black market prices reaching Rs 300 to Rs 400 per kg. This has effectively broken the budget of daily-wage earners. "Earlier cooking gas was 80-90 rupees per kilogram... Now it is 300-400 rupees, even 500," said Milan Kumar Mondal, a construction worker in Delhi.
The crisis is hollowing out urban markets. In Delhi’s Gandhinagar, Asia’s largest ready-made garments market, an estimated 70-80% of shops and small factories have shut down due to an acute labour shortage. "Workers are being forced to buy LPG at Rs 300-Rs 400 per kg, a price they cannot afford, leading them to leave their jobs and return to their villages," said Kishan Goyal, president of the Readymade Garments Merchants Association.
Across the country, a parallel wave of labour unrest is also building. Workers in Noida’s garment and electronics belt have taken to the streets, demanding a minimum wage hike to match neighbouring Gurgaon. "Our current minimum wage for unskilled labour is around Rs 435 a day, while in Haryana it has been raised to Rs 585," said a protester. Another worker, Kumkum, highlighted the compounding crisis, asking, "How do we survive on Rs 11,000 to Rs 13,000 a month when black-market gas is going for Rs 400 a kg?"
However, for those returning to their villages, the rural job market has collapsed. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has effectively ground to a halt. The scheme was legally repealed and replaced by the new Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-GRAMG) from April 1, but with no operational rules or fund clarity from the Centre, there is a complete vacuum.
The NREGA Sangharsh Morcha slammed the government's opaque handling of the transition. It highlighted the government's "lack of transparency on VB-GRAMG," noting that the budget speech gave "no indication whatsoever of where and when VB-GRAMG is to be notified," leaving states, functionaries, and workers "even more confused".
The official data reveals a catastrophic collapse. While over 10.5 crore persondays were generated in the first half of April 2025, only a fraction of that—just 95 lakh—have been generated so far in April 2026. Wage payments have also stalled, with nearly ₹10,000 crore pending and almost no payments cleared since January 21, 2026.
In Gujarat, the crisis has become acute, with the All Gujarat MGNREGA Employees Union warning of a statewide agitation. "Despite working continuously, MGNREGA workers and employees across Gujarat have not been paid for 5/6 months," said union president Rakesh Kumar. He added, "People are borrowing just to survive, and even basic needs are becoming difficult to meet especially in rural areas".
Adding to the dysfunction, local officials across states like Karnataka, Rajasthan, and Uttar Pradesh are refusing to accept new applications for work, citing a lack of instructions on the new VB-GRAMG scheme. Even where worker pressure has forced acceptance of applications, no new worksites have been opened.
The NREGA Sangharsh Morcha has specifically highlighted the government's use of a "July 2021 Circular imposing a cap of 20 works per panchayat in NREGASoft," calling it an "arbitrary technical restriction" that is "illegal and in violation of the MGNREGA Act," and is being used to deny workers their statutory right to employment.
For the first time in over a decade, the revised wage rates for rural workers have not been notified before the start of the financial year. This delay is a stark indicator of the scheme's abandonment. The situation is most alarming in West Bengal, where no MGNREGA work has happened since December 2021.
Despite a Calcutta High Court order in June 2025 directing its resumption, and a subsequent Supreme Court order upholding it, ground reality remains unchanged. The Centre had assured the court that MGNREGA would remain operational till VB-GRAMG was notified, but on the ground, millions remain in distress, their pleas for work and survival lost between the tall claims of the state and the hollow promises of the Centre.
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