From an annual average growth rate of 3.5 per cent during 1950 to 1980, the growth rate of the Indian economy accelerated to around 6.0 per cent in the 1980s and 1990s. In the last four years (2003-04 to 2006-07), the Indian economy grew by 8.6 per cent.
Both factors are aggravated by yet another supply-side argument: Spare capacities in both refining and production are limited, as the investments of oil producing countries have been responding too slowly to the unexpected pace of demand growth. Now, it is taking time to open up the bottlenecks.