2 This is because the lower rate structure means that the rate with which you discount expected future returns on your asset is lower and hence the asset price is higher for any given flow of future earnings.
In the Indian context, the preamble to the Reserve Bank of India Act, 1934 delineates the basic functions of the Reserve Bank as, “to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.” The objectives of monetary policy evolved from this broad guideline as maintaining of price stability and ensuring adequate flow of credit to the productive sectors of the economy.