The Indian government will not borrow any more funds from the market in the current financial year to March, a government source said on Friday.

Earlier traders said that an upward revision in the net borrowing target of the government to Rs 1.12 trillion from Rs 958 billion estimated earlier had led to speculation that it might have to borrow more from the market.

The source also added that the cut in rates on special deposit schemes will be effective from April 1.

The reduction in rates on other schemes such as public provident fund and small savings schemes will take effect from March 1, the source said.

Finance Minister Jaswant Singh surprised markets earlier in the day with a larger-than-expected one percentage point cut in the rates on various state savings schemes while unveiling the budget for the year beginning in April.

Participants had expected a half percentage point cut in these rates, which range from a low of 3.5 per cent to a high of 9.5 per cent.

Reuters