The ballooning fiscal deficit and the increased spending program have thrown up a new set of problems for the Reserve Bank of India. The RBI may now be under pressure to make sure that interest rates stay low, as high government borrowing makes money harder to come by for others looking for cash.

"RBI has done what they could have done in response to the global downturn. We will further see what can be done and we'll keep on consulting with them," said Finance Minister Pranab Mukherjee. 

Mukherjee passing the buck to the RBI has left the RBI governor D Subbarao to manage the heavy government borrowing program. 

A day after the government announced that it would borrow a record Rs 3.9 lakh crore from the market, the concerns about tightening liquidity and a rise in interest rates have already hit the markets. 

The government intends to complete nearly 60 per cent of it in the first half of the year, which means that it will borrow nearly Rs 11,000 crore to 12,000 crore every week.

As the government sucks out liquidity from the market, private borrowers who are also looking to raise money in the market will have lesser funds to avail of. 

Along with availability, cost of money is also becoming a concern. The 10-year government bond yield has once crossed 7.05 per cent as against 6.81 per cent a day before the budget. 

The benchmark corporate bond yield has risen too to close to 8 per cent. As yields rise so will the cost of funding for corporates and banks and eventually consumers. 

Analysts fear that the spectre of rising rates and tightening liquidity could take the steam out of an early recovery. So even as the government delays fiscal consolidation, to continue giving a push to growth, ironically its policies may end up doing exactly the opposite.