In an interview to discuss the impact of rising oil prices – which yesterday touched $126 per barrel – on both the world economy and India’s economy, economist and former Chief Statistician of India Pronab Sen said that rising oil prices could reduce India’s expected GDP growth by up to 2.5%. He agreed that this was a fairly substantial fall.

Sen said he was particularly worried about India’s exports to the Gulf region which have presently been blocked by the closure of the Strait of Hormuz. He said he was not confident that India could find alternate markets for what it sells to the Gulf countries and if it can’t this will have a direct impact on the concerned exporters leading, he agreed, to losses in jobs. This, he believes, will be a major component of the decline in GDP growth that he talked about.