The Elasticity of Demand for Money

To understand the comment below understanding of the article at the following link is a requisite,

http://economictimes.indiatimes.com/Opinion/Columnists/Mythili-Bhusnurmath/Dont-take-savers-for-granted/articleshow/6185385.cms?curpg=1

Of course, the assumption is non-behavioral and incomplete for inflation is a major concern, before the Central-bank, while deciding for interest-rates, besides demand for investment and supply of savings. Savings mainly come from middle-class and above and the demand for investment largely comes from upper-class and little from middle-class and the lower-class, the majority in India, rely on their piggy-banks and hardly goes to bank for interest income. The reason being, the cost of reaching banks and/or the banks reaching the cost. And, to mobilize savings for investment purposes, the cost of reaching banks to keep the demand for investment matched with supply of savings, it is good for the banks to bear the cost of reaching banks. The case here for lower class is same as in the Great-Depression of 1930s, when interest-rates were at their institutional minimum or close to zero or economy experiencing a liquidity-trap, and, nobody bothered to incur the cost of reaching banks and neither banks cared for reaching the public. If banks would have cared to reach the public in form of higher interest-rates, the public would have saved and the economy had recovered sooner than it took. The point is that the marginal changes in interest-rates should be sufficient to change the economy’s demand for money as a whole and the demand for low, middle and, high classes in particular, and only then we can expect to determine a relationship between rate of interest and savings for partial equilibrium of different classes. Here the elasticity of demand for money for different classes could be a factor in determining the relationship mentioned above. The cause mainly responsible for decline in rate of savings can be attributed to rate of inflation and the growth rate we realized in the past decade, 8-9%, which are often associated with the same factor, inflation. Higher growth rates are a result of high demand and high inflation-targets and low interest rates and vice-versa.