The fact remains that the phase till the 1970s represented the era of the dominance of external assistance as a financing instrument in balance of payments. (See Table 2 for net capital inflows to India). The second oil price shock was the precursor of another phase of strain on India's balance of payments.
However, emergence of rising invisible surplus in India's balance of payments helped neutralise the widening trade deficit. Notwithstanding this, the CAD averaged 1.5 per cent of the GDP in the Sixth Plan. Against the backdrop of second oil shock, the decade of the 1980s brought the balance of payments position to the forefront of the macroeconomic management.