Gold traditionally was an important asset for every country that is involved in international trade, lend and borrow money from other countries. A huge gold reserve would imply a strong and robust health of a country's finance and economy.
This has changed now. The health of a country's financial status is based on its trades, it's overseas investments, overseas bonds and some investments in gold or other precious commodities.
The concept that if we have more gold, then the value of the ruppee will go up or the value of the dollar will go down is not true. This is simply because, there are not many countries who would accept gold as against the dollar for regular day to day international imports. Similarly, we cannot just accept gold as payment for our exports to other countries because we cannot use gold as an instrument of internal payments too.
Giving our gold to the country for 10 years would not make much of a difference because it has to be given back. Instead, we need to find a way to reduce imports and improve exports, be self sufficient, curb the black market or the parallel Indian economy, improve productivity and efficiency. All these and more would help in reduce the need for borrowing by India, reduce our international debt and strengthen the economy. For our rupee to be stronger we also need to invest diversely and smartly in US dollar, upcoming economies and international bonds.
The only important role if we have a huge gold reserve is, at times of crisis wherein a country's economy has collapsed ( like Venezuela), the government can slowly use the gold reserve to pay of debts or pay for essential imports to keep the country afloat.