The Indian government is planning to sell bonds worth Rs 15,000 crore on December 30 this year as part of an unscheduled auction.

The move is to offset the cancellation of a Rs 4,000 crore auction last month and to arrange funding for a cash requirement, according to the finance ministry. It will also alley fears in the market that India will be forced to announce additional borrowing for the current fiscal year as the economic slowdown reduces target.

Analysts say that government borrowings will boost the yield on Indian bonds. The benchmark 10-year government bond yield is expected to rise 5 basis points in opening trades on Tuesday following the announcement of the unscheduled auction.

They say that the government has not made it clear if the funding will be a part of the already announced borrowing target for the current year. Market expects the government to announce additional borrowing of about Rs 40,000 crore in the current financial year.

Meanwhile, The Indian government has planned to borrow $9.5 billion or about 500 billion rupees from public sector banks in the country, a move that will help reduce the need to increase sales of new bonds and also allow market to maintain its growth.

Acceding to reports, the government will use shares and land as collateral to raise the money from the banks. Data released by JPMorgan & Chase showed that rupee-denominated notes earned 2.7 percent in the month. Rupee debt earned 0.8 percent in Brazil, 1.1 percent in China and 0.06 percent in Russia while 10-year yields slid 34 basis points to 8.40 percent.

The sovereign bonds have recorded the highest growth this month after the RBI halted a series of increasing interest rates. Analysts believe that the government will have to revise its debt-sale target for a second time in the financial year due to eroding revenues.