Prime Minister's Economic Advisory Council Chairman C Rangarajan said in Mumbai on Saturday that banning gold imports will result in the increase in smuggling of the precious metal.

Addresing the silver jubilee celebrations of the Indira Gandhi Institute of Development research, C. Rangarajan said that there are already indications of smuggling of gold going up in the last three months.

Stating that people use gold as a hedge against price rise, he said that gold imports will come down only when inflation comes down.

He also informed that Revenue Department officials have told him that the seizures of smuggled gold have gone up in the recent past.

Speaking at the same event RBI governor , D. Subbarao clarified that although there are growing concerns over increasing imports of gold, the RBI has not put any new restriction on gold imports.

He clarified that the RBI's announcement to stop lending for gold purchases was only a reiteration of an older decision.