At least until Nov 2016, wouldn't this income have been cash given that cash transactions accounted for 95+% of transactions[1]? (Percentage by total amount would have been useful too but I couldn't find that stat.) If these were 'unaccounted' then demonetization would have caught that. But only 1% of banned currency wasn't deposited (as of Aug 2017) [2]. The initial estimates given were for about 20% to not show up [3]. That didn't turn out to be the case.
So while I'm sure there is unaccounted income, I'm not sure this is most of the income of a very large middle class.
[1] https://www.forbes.com/sites/wadeshepard/2016/12/14/inside-i...
[2]https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...
[3] https://www.forbes.com/sites/wadeshepard/2016/12/10/indias-c...