MUMBAI: Indian bond yields edged higher on Monday, following the government's decision to further increase its market borrowing but sharper losses were prevented on expectations of the central bank stepping in to rescue as and when needed.

The benchmark 10-year bond yield was trading at 6.02% at 0820 GMT after touching 6.03% earlier and 2 basis points above its close on Friday.

"The 10-year yield is expected to remain under pressure on concerns of excess supply," HDFC Bank said in a note. "We expect 10-year yield to trade in the range of 5.99% to 6.06% this week".

India's federal government will borrow 1.58 trillion rupees ($22 billion) from the market to compensate the country's states for a shortfall in tax receipts this fiscal year, it said on Friday.

This borrowing will be in addition to the massive 12.06 trillion rupees that is already scheduled for the year.

"The weekly auctions are already a struggle to clear and with the additional supply now, it is only going to make it worse," a senior trader at a private bank said.

"RBI will have to keep doing more open market purchases or announce some other steps to ease the pain for the market and ensure borrowing goes through."

Friday's auction saw weak demand from participants, with the government raising 265.50 billion rupees through bond sale.

But the Reserve Bank of India (RBI) directed underwriters to buy over 74 billion rupees out of 140 billion rupees worth benchmark bond on sale.

Traders are pinning hopes on the RBI's support and also awaiting the monetary policy committee's meeting later this week.

Outcome of the meeting will be announced on Friday and the central bank's liquidity stance and guidance will be key for markets with rates expected to stay unchanged.

The government is also set to release the January-March GDP data later in the day.