First, using a character based column for any kind of sequential identifier is problematic and costly of its own accord.  So you probably need to get away from that idea...

Try the following:
IF OBJECT_ID(N'tempdb..#TEMP_TABLE', N'U') IS NOT NULL
    BEGIN
    DROP TABLE #TEMP_TABLE;
    END;

SELECT '01' AS 'rn', '2017-07-01' AS 'dt', '1' AS 'status'
INTO #TEMP_TABLE
UNION ALL

Okay folks.   Recursion is not necessarily a problem, although it certainly can be.  For smaller data sets, it can be quite helpful.   I took a look at this and my...

Insufficient detail.   Please be a lot more detailed in your description of EXACTLY what you are trying to do.   You can't just assume that everyone here knows what you are...