Prime minister is the most powerful Indian leader in a generation, working in secret and challenging bureaucrats; cabinet got 20-minute heads-up on cash crunch. Indian Prime Minister Narendra Modi stunned the country in November when he canceled nearly 90% of its paper money. For weeks, tens of millions of people lined up daily at banks to redeem old bills. Sales at cash-dependent businesses collapsed.

The growth of Asia’s third-largest economy slowed to a two-year low. It was a quintessential move by Mr. Modi, planned in secret with a handful of close advisers. He ...