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The government source said the fiscal deficit could reach 5.5 to 5.6 percent of gross domestic product in 2012/13, which could require additional market borrowing of 350-400 billion rupees.
The benchmark 10-year bond yield rose to as high as 8.23 percent, up 3 basis points from levels before the news. The yield was last trading at 8.22 percent compared to its 8.21 percent close on Wednesday.