Two months after the Indian government abruptly decided to swap the most widely used currency notes for new bills, the economy is suffering. The manufacturing sector is contracting; real estate and car sales are down; and farm workers, shopkeepers and other Indians report that a shortage of cash has made life increasingly difficult.

Prime Minister Narendra Modi announced on Nov. 8 that the 500 and 1,000 rupee notes (roughly $7.50 and $15) that made up about 86 percent of all currency in circulation could no longer be used in most transactions and would be replaced by new 500 and 2,000 rupee notes. People could deposit old notes in banks until Dec. 30 and withdraw a limited number of new notes every week. This was meant to help identify people who were hoarding cash — or “black money,” as it is known in India — to avoid paying taxes or to engage in corruption. Mr. Modi’s government later said that it was also eager for Indians to move to electronic transactions.

But the swap was atrociously planned and executed. Indians had to line up for hours outside banks to deposit and withdraw cash. New notes have been in short supply because the government did not print enough of them in advance. The cash crunch has been worst in small towns and rural areas. The amount of cash in circulation fell by nearly half, from 17.7 trillion rupees ($260 billion) on Nov. 4 to 9.2 trillion ($135 billion) on Dec. 23, according to the Reserve Bank of India.