India will decide on lowering both fiscal deficit and market borrowing in the July budget after the formation of a new government, following a record dividend from its central bank, a source familiar with the matter told Reuters.

The board of India's central bank approved on Wednesday a record surplus transfer of 2.11 trillion rupees ($25.3 billion) to the government for the fiscal year that ended in March, sharply above analysts' and government projections.

(Reporting by Nikunj Ohri, writing by Tanvi Mehta, editing by Andrew Cawthorne)