(Adds details, quotes)
NEW DELHI, March 18 (Reuters) - India will borrow 3.49 trillion rupees ($64.39 billion) in the first half of the new fiscal year that begins on April 1, or 60 percent of the full-year gross target, a senior finance ministry official said on Monday, in line with market expectation.
New Delhi will borrow 150 billion rupees through bonds on an average every week in the April-September period, Arvind Mayaram, economic affairs secretary, told reporters outside the ministry. On a net basis, the government will borrow 58 percent of its full-year target in the first half.
The government plans to borrow a gross 5.79 trillion rupees in 2013/14, excluding the 500 billion rupees of bonds it will sell to fund a buy back.
New Delhi is likely to buy back bonds from the Reserve Bank of India (RBI), and details of the re-purchase will be decided mid-April, another finance ministry official said.
"The government buying back bonds from the RBI will give more space for RBI if it wants to conduct open market operations," said Paresh Nayar, head of trading at First Rand Bank.
"The gross borrowing at 60 percent of total issuance is in line. Yields will be capped this month and people will build up positions before supplies hit in April."
The government also plans to issue 120-200 billion rupees of inflation-indexed bonds in the April-September period as part of its gross borrowing, the second official in the finance ministry said.
The benchmark 10-year bond yield closed 2 basis points higher at 7.88 percent, after rising to as high as 7.89 percent earlier in the session, ahead of the government's borrowing details and the RBI's monetary policy on Tuesday.
The yields are likely to marginally soften as government borrowing is in line with market expectations, but will take further cues from the central bank's monetary policy decision.
The RBI is widely expected to cut its key repo rate by 25 basis points at its mid-quarter review. ($1=54.2 rupees) (Reporting by Manoj Kumar, writing by Shamik Paul; Editing by Ron Popeski)