BENGALURU: India’s benchmark bond yield surged on a selloff that picked pace on Tuesday as the government announced increased borrowings in its 2022-23 federal budget, while a plan to boost spending to revive the pandemic-hit economy lifted the stock markets.

The government is targeting gross borrowing of 14.95 trillion rupees ($199.90 billion) to support a bigger annual budget of 39.45 trillion rupees as it boosts investments in highways and affordable housing.

Finance Minister Nirmala Sitharaman said the fiscal deficit for the current financial year was expected to be 6.9%, slightly more than the 6.8% targeted earlier.

The benchmark 10-year bond yield rose 15 basis points (bps), posting its biggest single-day rise since May 11, 2020. So far this year, the benchmark has already risen 38 bps on top of the 56 bps in 2021. Earlier in the session, the yield had surged 22 bps to 6.87%, hitting levels last seen in early July 2019.