Current account deficit and falling rupee are biggest concerns of the Gulf crisis

The Chief Economist of Axis Bank and a Member of the Prime Minister’s Economic Advisory Council says in his opinion the current account deficit and the falling rupee are the “most binding constraints” emerging out of the current Gulf crisis. Neelkanth Mishra also believes that the impact of the Gulf war and the oil crisis could be around 0.7%-08% of GDP growth. He says: “The sensitivity is that about $15 per barrel increase in oil price costs the economy about $40 billion or 1% of GDP. So if you take the average price of $70 a barrel of last year, if the oil price averages $85 a barrel, there’s a 1% of GDP impact. If it’s a $100 a barrel, it’s a 2% of GDP impact.”