I think if we look from RBI's point of view, then incr in sal incr person's purchasing power (i.e. more amount of money will come in market), people will try spending more and therefore costs of major commodities may go higher. If RBI does not excercise its RRR policy then, costs will go up more and inflation rate increases. So as to curb that, RBI has to take steps so that lending banks will have less money to lend and therefore purchasing power is limited to one's own sal. I appreciate the discussion here. It was great. Akhil
