Speaking to The Financial Express in an exclusive interview, Jain said that the Voluntary Disclosure of Income Scheme (VDIS), launched by the former finance minister P Chidambaram, was a success because amnesty was provided in the scheme.

There is a huge amount of gold lying in the country as idle asset with households and various charitable and religious institutions. A very large amount of this idle gold can be mobilised if amnesty is provided. People having unaccounted gold will be willing to deposit them in banks under the scheme against amnesty.

If the government could successfully mobilise unaccounted money through VDIS by providing suitable amnesty, then why it cannot do in case of unaccounted gold, quipped Jain.

He, however, welcomed the recent notification on GDS ascertain other incentives mentioned in the scheme will encourage depositors. He stated that the Reserve Bank of India (RBI) should care to announce a higher interest rate to encourage depositors.

Jain lauded government's efforts in the present situation to lessen the amount of gold imports by attempting to mobilise idle gold through GDS. He said that huge imports of gold in recent times has caused a considerable drainage of foreign exchange. The demand for gold in the country is rising with the growth in population rate and rising income of the people.

The fall in global prices is one of the major cause for imports of gold. At present, the global prices of gold has fallen to $ 255.90 per triounce as against $ 292 per triounce in the corresponding period in the previous year. This fall in international prices has a corresponding effect on domestic prices of gold.

At present the price of standard gold has fallen to Rs 4,050 per 10 grams in Delhi market from Rs 4,280 per 10 grams in the corresponding periodin the previous year. The price of Bitur too has fallen to Rs 4,040 per 10 grams in Delhi market from Rs 4,265 per 10 grams in the corresponding period in the previous year. This fall in domestic prices has caused a craze in the public to acquire gold.

The gold trade in the country has also increased after the repeal of the Gold Control Act in 1990. Earlier, before the repeal of this Act, there was only 15,500 jewellery shops in the country, but today there are over a lakh of jewellery shops. This increase in gold trade in the country has also facilitated the demand for gold. He, however, admitted that the repeal of the Act was needed in the interest of the trade and consumers.

Jain was of the view that GDS in its present form will be able to mobilise only a part of the idle gold as amnesty has not been provided. However, this partial mobilisation of idle gold will help to reduce imports to a certain extent. He welcomed the proposal to exempt the interest on gold deposit bonds and certificates from incometax and exempting from wealth tax the value of assets deposited.

Jain also welcomed the exemption of capital gains tax on any capital gains made on these gold bonds or certificates through trading or at redemption.

He welcomed the Centre's move to persuade state governments to consider exempting movement of gold covered under the scheme from octroi, sales tax, stamp duty and similar levies.

Jain also urged the Centre to introduce paper currency notes of Rs 5000 and above to facilitate liquidity in the market.