> Is there something in xsl for incrementing
> a number like i = i + 1 ?

You can have <xsl:value-of select="$i + 1"/> but you can't have 
i = i + 1 (unless 0 = 1 and mathematics is inconsistent)


> I need to use that as a function for <a href="link-to-somewhere?para=i>Link</a>

You need to generate output numbers as a function of the input (eg using
position() or count() not as a function of the last number output.
This is a general feature of declarative languages.

David


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