Parallel economy in India has substantial amount of illicit money, which are used to fund these anti-social activities. So in order to create countermeasures to these problems, the government had introduced a radical move, which caught the entire nation by surprise – which was demonetisation. On November 8th 2016, Prime Minister Narendra Modi announced to the public that the old denominations of ₹500 and ₹1000 bills of Mahatma Gandhi Series will be ceased to be a legal tender in the country and instead those notes will be replaced by new notes of Mahatma Gandhi series bearing the denomination of ₹500 and ₹2000. In this study, the main emphasis will be given on the impact of demonetisation on the different factors. As the demonetisation had occurred in the year of 2016, by looking at the economic variables of the current year 2019, it will become easier to determine the long run consequences of the demonetization (Shashishar, 2018). In order to get a clear picture of the effect of the demonetisation on the lives of the citizens as well as the domestic businesses as a whole, many factors were taken into consideration, which might be highly influenced due to the demonetisation. This research will be analysed deeply and thoroughly, so that this study could identify the trends, which could show the long run health of the Indian economy. By verifying the previous reports and as well as carrying out fresh survey reports to determine whether the people were positively or adversely affected by the demonetisation. By carefully analysing the data yielded from the primary data, this study will determine whether demonetisation is a serious game changing policy or if it is reckless political gimmick. Before demonetisation, tax collection was lowest at 10%. However, after the introduction of the demonetisation, the tax collection has visibly improved, since GDP remained stable despite of facing the shock of demonetisation. With the introduction of the GST, which streamlined and systemised the tax collection and with the scrapping of these notes of the two highest denominations of ₹500 and ₹ 1000, tax evaders are left with very little avenues to park their unaccounted money. In addition to that, the government had also introduced the penalty for the unaccounted, which is 200% of penalty of the unaccounted money, which is dealing a major blow to the tax evaders. In addition, in order to prevent tax evaders to convert their surplus money into investment commodities like gold, the government had made it mandatory to furnish the PAN card while buying gold and jewelleries. Although the government only managed to scrap out ₹107.2 billion black money out of economy, which was radically different from the government estimate of ₹ 3 lakh crore, because of the stringent checking, around ₹2.89 lakh crore, are under the radar of the Income Tax department (Babar, 2017).