Impact of Demonetization on Indian Economy

India has come a long way in modernizing its economy through fiscal and monetary policy along with banking sector reforms in order to improve living standards for a huge fragment of its population. India's economy has been one of the largest contributors to global growth over the last decade, accounting for about 10% of the world's increase in economic activity since 2005, while GDP per capita in purchasing power parity terms is today three times as high as in 2000. In the light of the importance of GDP, it is important to look at the recent changes in the money and financial sector. Demonetization has put several changes in which money is used and has a profound effect on the economy. This paper delves need of demonetization and the way ahead for common man and government. The article is also an attempt to discuss and predict impact of demonetization on parallel economy, money supply, effect on demand and price, effect on diverse economic entities, banks, GDP and effect on e-transactions and alternative modes of payments. It is too early to conclude the comprehensive impact of demonetization but overall economy is expected to benefit from a decrease in unaccounted cash transactions and an elimination of counterfeit currency notes. The present government brought a pertinent monetary reform i.e. demonetization which can be viewed as milestone for the development of the Indian economy and its impact is expected to be positive for overall growth of the country.