Bonds took a hit after the government's annual economic survey called for a pause in fiscal consolidation, leading to concerns that New Delhi would widen its fiscal deficit targets when it unveils its annual budget on Thursday.

The Finance Ministry's chief economic adviser, Arvind Subramanian, also told a news conference he saw less scope for monetary policy easing because of a recent acceleration in inflation, further pressuring bonds.

The 6.79 percent 10-year bond yield rose to as high as 7.61 percent, while the recently unveiled 7.17 percent 10-year bond yield was up 10 bps at 7.41 percent.