Mrs Narayan told the court she had not intended to kill her husband but to punish him for his alleged infidelity.
Prosecutor Lucy Boord said Mrs Narayan had confessed to her neighbours, telling them she was a "jealous wife" and believed her husband was having an affair.
"I just wanted to burn his penis so it belongs to me and no one else, I didn't mean this to happen," Ms Boord quoted Mrs Narayan as saying.
The fire, on 8 December 2008, caused damage to the couple's house estimated at 1m Australian dollars ($715,000, £490,000).
Mrs Narayan was initially charged with arson and endangering life - including the lives of her three children who were in the house at the time.