The withdrawal of `2,000 notes from public circulation is unlikely to disrupt the economy like demonetisation did, said Mehul Pandya, managing director and CEO, CareEdge, adding that such a move was always expected.
“It was a known thing that such a move was eventually going to happen. There was always an expectation from the time that the Reserve Bank of India stopped printing the notes and we were seeing very few of them. They were about 11% of the total currency in circulation,” he told FE in an interaction.
The impact would be higher for banks in terms of higher deposits, which are expected at about `1 trillion-1.8 trillion over a period of four months, he said, adding that this would mean that banks would not have to go for certificate of deposits to mobile deposits.
The agency remains “cautiously optimistic” about growth in the current fiscal and believes that private capital expenditure could see a revival towards the end of the year.
“The broad indicators are reflective that the economy is doing well and it should continue to do well,” Pandya said. He, however, noted that the impact of global headwinds continues to be a concern. A pick-up in rural demand is also being closely monitored, after being quite promising over the last two quarters. It would depend on how the monsoon and El Nino play out, he noted. The agency expects the economy to grow by 6.1% in the current fiscal, after about 7% in FY23.
Pandya noted that the manufacturing sector still needs to gain traction ,as till now the services sector has been contributing to economic growth. While the production-linked incentive scheme of the government would help the sector, companies are also waiting to see sustained demand, Pandya said, adding that it seems to be missing at this juncture.
A recovery in private capital expenditure would also depend on sustained domestic demand, as well as how exports behave, he said. “Consequent to the Insolvency and Bankruptcy Code, over the last few years, many of the assets that the major corporates wanted have been acquired and absorbed through the process. That has helped in augmenting capacity and to that extent, creation of new capacities got extended,” he said, adding that now is the time when more new capacities should also be getting created.
“If you look at the overall announcements for projects, as far as capex is concerned, announcements have been made, the intent to invest is indeed there. The fructification of this intent, or crystallisation, over the next year is something which remains to be seen. But we are optimistic that over the next couple of quarters, we should be seeing something positive on this,” he said.