This article has made an attempt to assess how the tool of Demonetization can be used to eradicate parallel economy. Demonetization is one of the big steps initiated by Government in addressing the various issues like black money, counterfeit currency, corruption, terrorism etc. History of demonetization in India and around the world is addressed. Lesson from historically demonetization guides us how to redefine economy of country by overcoming the earlier causes for failure. Demonetization obliviously brings many inconveniences to common people but it is for only short term. However the long term benefits of demonetization overrides the short term challenges. Government initiatives like Income Declaration Scheme 2016, Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, Joint Declaration of AEOI between India and Switzerland to address black money etc. in redefining Indian economy are to be appreciate and these initiatives leaves their footsteps as part of history.