MUMBAI (Reuters) - Indian bonds and the rupee fell in early trading on Monday after the government set a higher-than-expected fiscal deficit target for the 2015/16 year as part of the federal budget unveiled on Saturday.
The budget announced a fiscal deficit target of 3.9 percent of gross domestic product for the fiscal year starting in April, higher than an expected 3.6 percent.
The government also said it would cut the deficit to 3 percent of GDP by the 2017/18 fiscal year, one year later than expected.
The benchmark 10-year bond yield rose 3 basis points to 7.75 pct initially, and was trading up 1 bp at 7.73 percent from its Friday close by 0921 India time (0351 GMT).
The rupee weakened slightly to 61.86 per dollar compared to its 61.83/84 close on Friday, tracking Asian peers after China's central bank cut interest rates on Saturday.
(Reporting by Suvashree Dey Choudhury and Neha Dasgupta)
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