Reserve Bank of India governor Raghuram Rajan on Saturday sought better student loan schemes as he felt that there were lot of stress on education loans.

Taking the theme of rationalizing tax structure as finance minister Arun Jaitley presents budget next week, he spoke against the inheritance tax. He said the focus should on bringing people up rather than bringing down those who are well-off. Because of such a tax, there will be no incentive for wealth creation, he said.

Rajan also strongly advocated punishing of black money holders by streamlining laws and enforcement.

Terming the black money issue as "sensitive" he said what is important is ensuring that conditions are such that people don't misuse the rules and regulations and don't have the incentive to park money outside.

"Let people pay, but if they don't pay, go after them. That message has to get out. People have to know if they evade, they will be penalised. We need to strengthen the tax administration as part of the government," Rajan said.

The best way to prevent law breaking is to reduce the incentive to do that, Rajan said.

On future rate cuts he said it would depend on the fiscal consolidation path in the upcoming budget. Defending the the status quo on the policy front, the governor said, "further action will be in the direction of rate cut that was initiated, and it will depend on the developments in particular on the fiscal front as well as a continuation of the disinflationary process." He indicated that the quality of fiscal consolidation, rather than the headline deficit numbers alone, will be important for him while undertaking any future rate cuts.

"It is not that we are locked to a specific number or a specific path, but it is the overall package, whether it makes for serious, high quality fiscal consolidation over time that clearly will impact the inflationary forces that we are most worried about. We will be looking at all aspects of the budget and they are eagerly awaited," Rajan said.

While rejecting bankers' call to extend the loan restructuring window beyond April 1 he said “to build confidence in banks' balance sheets, we have to come to an end of forbearance. We have to put banks on the right track. I do not think the answer is to pretend and extend or extend and pretend; it is to call spade a spade," Rajan said.