India has amongst the highest level of currencies in circulation at 12.1% of GDP. Cash on hand is an estimated at around 3.2% of household assets, higher than investment in equities, or roughly around $ 220 billion. Of this cash, 87% is in the form of Rs. 500 and Rs. 1,000 notes or roughly Rs. 14 lakhs cores ($19 billion). A significant portion of the household cash on hand is generated by economic transactions that are not reported to tax authorities or generated through corruption. On 8th November 2016 night Prime Minister of India Mr. Narendar Modi in his unscheduled television address to the nation announced that the currency notes of 500 and 1000 denomination will not be a legal tender money from midnight. Government took this step of demonetizing the currency as a tool to fight against black money and corruption in Indian Economy. Scrapping the higher demonetization money would either result in these being brought into the system or the money just disappearing. So we are presenting this paper to highlights the impact of demonetization in Indian economy.