Better timing would have been to wait until adoption of the Government's own pan-Indian electronic payment scheme ('Unified Payment Interface'), including giving small vendors card reading devices.
Yes, the timing does mean that major political parties in UP would be hurt because their insane amount of hoarded cash is in trouble but really, is that a bad thing?
As pointed out in comments above, this step does make sense given what the govt. has been trying to do to fight black money in the past 2 years.
In fact Modi keeps mentioning that this is not the last of the steps and there will be more measures coming into affect soon. Keeping the hoarders scared was really needed here.
If you're on the ground in India, you can tell people are thinking twice before selling their properties for cash (it's very common for people to sell for 70/30 or so ratio for white and black money) / other hoarding activities.
On the other hand, demand for gold has gone up. That's definitely a more fungible form of black money than property.
Well, there are elections every year [1] in India in some or the other key states. Not denying what you are saying but any timing would raise political eyebrows. IMO average citizens have no problem with politicians drumbeating things that has positive impact.
[1] http://www.elections.in/upcoming-elections-in-india.html