The word Demonetisation means when a currency is deprived of its being a legal tender. : 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 lakh crore ($190 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. Scrapping the higher denomination money would either result in these being brought into the system or the money just disappearing. The Indian Prime Minister gave sleepless nights to the citizens of this country when he made a public announcement on 8^th November, 2016 demonetising  Rs. 500 & Rs. 1000 notes of its legal value. The present paper highlights immediate impact of demonetisation on common people of India and  the probable consequences of this decision on Indian economy.

KEYWORDS: Demonetisation, Black money, Cash crunch, Cashless economy.