“We expect Q1 FY24 GDP growth at 8.1% with an upward bias due to the impact of ₹2,000 note withdrawal event…this reinforces our projection that FY24 GDP could be higher than 6.5%, basis the RBI estimate,” a note said.
It can be noted that earlier this month, the RBI informed that over half of the currency notes in the denomination have returned back, with 85% of it coming as deposits into banks, while the remaining 15% have been exchanged at bank counters.
Based on this experience, the SBI note said the consumption can get a ₹55,000 crore boost because of the move.
It estimated ₹3.08 lakh crore to come back as deposits into the system, of which ₹92,000 crore will come into saving banks accounts, of which 60% will get withdrawn, thus giving an immediate increase in consumption at ₹55,000 crore. In the long run, the boost can be ₹1.83 lakh crore because of the consumption multiplier, it added.
“One of the major benefits of withdrawal of ₹2000 note might be the immediate uptick in consumption demand,” the report said. It is expected that high-value amounts could move to high-value spends, according to the note.