Thank you for setting the record straight. The economic illiteracy I see on this board is indicative of why it is so hard to implement sound economic policies in India: people do not understand Economics and therefore end up voting for bad Economic Policy-makers.
I would like to add to your analysis. The RBI is also drawing a line in the sand about how much inflation it is willing to tolerate at all times and at all cost. This will depress inflationary expectations and make it less likely that inflationary expectations will build up and translate into actual higher inflation in the future. Tis called 'Rational Expectations' following the work of Muth Sargent Lucas et al
