…Withdrawal of Rs 2,000 note can boost growth by pushing consumption: ReportMumbai - The ?2,000 note withdrawal decision and response to it so far suggest that the move can help boost FY24 GDP growth to beyond 6.5% estimated by the RBI, a report said. The real GDP growth for the first quarter of FY24 will come at 8.1% with an upward bias and the Reserve Bank of India's 6.5% estimate can also be exceeded, economists at the country's largest lender SBI said.

"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back as deposits into the system, of which ?92,000 crore will come into saving banks accounts, of which 60% will get withdrawn, thus giving an immediate increase in consumption at ?55,000 crore.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.