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The Food Security Bill is a key part of the ruling Congress party's strategy to win re-election.
The partially convertible rupee was trading at 65.21/25 per dollar at 0904 India time (0334 GMT), sharply below its close of 64.30/31 on Monday.
The benchmark 10-year bond yield dropped 4 basis points at open to 8.30 percent as the central bank announced an open market purchase of bonds but soon edged higher, tracking weakness in the rupee.