Neelkanth Mishra, 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 falling rupee are the “most binding constraints” emerging out of the ongoing Gulf crisis.Mishra believes the impact of the Gulf war and subsequent the oil crisis could be around 0.7-0.8% of the gross domestic product (GDP) growth. He explains the sensitivity by saying, “a $15 per barrel increase in oil price costs the economy about $40 billion, or 1% of GDP. So, if you take last year’s average price of $70 a barrel and it averages $85 a barrel this year, that is a 1% of GDP impact. If it is $100 a barrel, the impact becomes 2% of the GDP.”Before the oil shock was felt, in February or March, the economy was growing above 7.5%, may be even 8%. At an average price of $100 a barrel, the rate of growth should have slowed by about two percentage points. However, the government has increased its fiscal intervention. In his estimate, the cost is nearly Rs 40-45,000 crores a month, or 0.1% of the GDP. This means that of the 2% annualised hit, approximately 1.2% is being borne by the government, with 0.8% flowing through to the economy. Thus, the GDP growth rate would have slowed by roughly 0.7-0.8%.