Labour unrest: Can India turn an energy shock into a wage-led economic growth impulse?

That comfort disappeared on 18 April when two Indian tankers were fired at during passage through the strait by the Islamic Revolutionary Guard Corps (IRGC) of Iran. An earlier tanker had gone through successfully, suggesting a fragmented command structure. The need of the hour, easier said than done, is to identify and engage with those multiple power nodes to achieve a synchronized policy towards Indian tankers.

Meanwhile, worker unrest had been gathering force in the industrial outskirts of Delhi, which turned violent on 13 April. In a not-unrelated development, India’s inflation rate for March released that evening printed at 3.4%. Only a slight uptick for sure, from 3.2% in February. But as a weighted average, it glossed over the ballooning price of cooking gas in March after the outbreak of hostilities in West Asia on 28 February.

Liquefied petroleum gas (LPG) in standard cylinders of 14.5kg by weight is sold to registered customers at an administered price, which has been hiked only by ₹60 to ₹913. But industrial workers are typically migrants without a registered connection. In the informal market, where smaller cylinders of 2kg or 5kg capacity can be refilled, there is a price carnival.

This is no criticism of the new Consumer Price Index (CPI), which is well structured (refer to my Mint piece of 3 April), but when cooking gas goes up in price anywhere from five times or more in the informal market, the official headline inflation rate becomes an irrelevant number.

For those who have no fuel to cook their own food, there are urban food carts functioning from gas-refillable cylinders. In Delhi, I found a roadside cart still offering lunch for ₹20, but it had only one-half of a kulcha sliced horizontally in place of a whole one as previously, a serving of potatoes with an occasional chick-pea, and a small blob of pickled carrots. None of the gathered clients mentioned the war which had reduced the content of the meal.

Wage levels of industrial workers are set at the state level. Recently, the government of Haryana commendably hiked minimum wages by 35% effective 1 April 2026, in response to worker unrest brewing for some months.

That hike provoked wage unrest in neighbouring Noida (short for New Okhla Industrial Development Authority) in Uttar Pradesh (UP), at an admittedly difficult time of rising raw material and logistics costs. The UP government responded with skill-calibrated wage hikes, but there are fears they will not be enforced, especially for labour hired through contractors.

By the 2025 Periodic Labour Force Survey (PLFS), upto half of workers in manufacturing receive a monthly wage of ₹15,000 at most. If engaged through a contractor who extracts a commission from that, workers receive less than the reported wage.

In informal settlements the monthly rental for a small room of 100 square feet is typically ₹5,000 (excluding utilities), leaving no margin whatever for sudden exigencies. Their ask is wages in the ₹18-20,000 range. By 2025 PLFS data, a monthly wage of ₹20,000 was in the uppermost quartile of salaried workers in manufacturing.

In textile and hosiery units in Noida, a major centre of labour unrest, the largely female workforce is also demanding reduced working hours, reported to be 12-hour days, and usable toilet facilities.

The labour shortage these units are reported to be facing might have driven these working hours, although the labour shortage itself reflects reverse migration back to rural homes after the tariff hikes, further reinforced by the spike in the price of cooking fuel.

Starting from an official headline inflation rate in the 3-4% range, any wage rise will enable a clear improvement in worker health and productivity that should dampen a wage-price spiral.

There could not be a better way to mark the 250th anniversary of Adam Smith’s classic work, An Inquiry into the Nature and Causes of the Wealth of Nations, published on 9 March 1776, which pointed to productivity as the true source of the wealth of nations.

An Indian policy on the anvil is a price stabilization fund (PSF) for creating a buffer reserve of petrol, diesel and liquefied petroleum gas (LPG). It is similar in conception to one set up back in 2014-15 for essential agricultural commodities, which has functioned very effectively (and even in the current year commands a budgetary allocation of ₹4,100 crore). The difference is that the supply end of agricultural commodities is amenable to greater domestic policy control than fuel products.

The April half-yearly review of the International Monetary Fund (IMF) has projected economic growth in India at 6.5% for both the current year and the one after, notwithstanding a projected decline in global growth to 3.1 and 3.2 % respectively.

It is for us to fulfil that IMF expectation with a focus, starting this May Day, on betterment of the lives, working conditions and thereby the productivity of the country’s industrial labour force.

The author is an economist.