The government on Tuesday said the possible war in Iraq was likely to have only a marginal impact on Indian economy as revival of domestic demand and resultant buoyancy would cushion any serious fallout.

"The impact of a possible war against Iraq on the growth prospects of the Indian economy is likely to be marginal in the short run. Notwithstanding such an impact, the overall growth performance of the Indian economy is unlikely to be seriously affected by the developments in the Gulf, due to clear signs of revival of domestic demand and the resultant buoyancy imparted to the domestic economy," Minister of State for Finance Anandrao V Adsul informed the Rajya Sabha.

In a written reply, Adsul said in the event of a short war in Iraq, the major impact would be on international crude oil prices, "wherein the country is well equipped to finance higher import bill in the event of a steep escalation of global oil prices or other exogenous developments."

While there may be a temporary setback to the export of goods and services to the Gulf region, overall exports are unlikely to be affected for too long.

Remittances from the Gulf region may also go down temporarily, the decline being preceded by a probable increase in remittance in anticipation of the conflict, he said.