NEW DELHI: The forthcoming Union Budget is likely to stay away from any 'harsh measures' amid heightened economic uncertainty and the country facing considerable challenges from the demonetisation induced demand shock, says a report.
According to the Dun & Bradstreet report, there is upside risk of further contagion from the slowdown in the developed economies and the Indian economy also faces considerable challenges from demonetisation especially in the rural segment.
Other major challenges include downturn in the pace of domestic growth and firming-up of global commodity prices.
The Union Budget 2017-18 is to be presented on February 1.
"There is considerable anticipation about the initiatives that the government will articulate to revive demand along with investments in its quest to accelerate growth and create the much needed jobs," said Arun Singh, Lead Economist Dun & Bradstreet India.
"Given the uncertainty already prevailing in the economy, the Budget is likely to stay away from any harsh measures that could further erode the confidence of India Inc," he added.
Meanwhile, weak industrial production, poor investment activity, deteriorating bank credit, rising non-performing assets, strengthening of core inflation, FII outflows and rupee depreciation are the concerns which have gradually accentuated over the years even before the impact of demonetisation hit the economy.
"Further, the rupee is expected to remain under pressure given the US protectionist agenda and upcoming state elections. In this framework, the Union Budget 2017-18 needs to be drafted prudently," Singh said.