Citizens' Issues
Regulations that don't put consumers' interest first

Why is it that the interests of consumers and consultations with consumers is never at the centre of any rules the regulators make?

If you ask a roomful of people whether the consumer should be the primary focus of financial sector regulation, it would be safe to bet that you will have nearly 100% concurrence. Every stakeholder pays verbal obeisance to the importance of the consumer of financial services. The preamble of all statutes creating independent regulators (for capital markets, insurance or provident funds) casts a duty on regulators to ‘develop’ markets and ‘protect investors’. But, as Moneylife has repeatedly pointed out, regulators and policy-makers merely dance around issues that consumers face, without ever interacting with them to frame appropriate regulation.

This is why after 25 years of modernisation, development and regulation by India’s capital market watchdog, we have only seen an exodus of retail investors from primary and secondary market as well as mutual funds. It is also the reason why we are an under-insured nation and why our pension regulator has made no headway. But, put a set of neutral people connected with the financial sector in a room and the focus immediately becomes the consumer. At an interesting panel discussion organised by CUTS International on 16th December, there was a strong consensus that ‘there is need to focus on the consumer as the core purpose of all financial sector regulation’.

What do I mean by regulators’ dance around consumer issues without addressing them? Consider how the Securities & Exchange Board of India (SEBI) deals with mis-selling of products to retail investors. First, it makes it impossible for genuine and honest advisors or brokerage firms to function by tying them up in costs, rules, red tape and permissions. Those who ignore the regulator happily fly below the radar, unless they do something so big and foolish that they are caught. And, even the honest and ethical, who occasionally stumble on meaningless rules, are hauled over the coals.

Instead, exemplary punitive action in select cases or adopting a class action approach to mis-selling techniques will get better results. Consider the Suchitra Krishnamoorthi case that we have repeatedly documented. SEBI took long enough to issue a show-cause notice to HSBC and is now hearing the matter. A stiff monetary penalty and disgorgement order will really send a strong message to banks who have perfected the art of mis-selling of third-party products to their customers. Banks violate their fiduciary responsibility to customers when they mis-sell mutual funds, insurance or wealth management services; they get away with it because the Reserve Bank of India (RBI) has a hands-off approach to products that have separate regulators.

Tough action by RBI or SEBI in Ms Krishnamoorthi’s case would fall squarely within the new global thinking on consumer protection, which has moved away from the meaningless disclosure-based regime that we continue to follow to a policy of ‘treating customers fairly’ and ensuring that financial products are simple, easy to understand and sold on the basis of the customers’ needs and financial profile. Let’s look at a couple of key issues that came up at this consumer-centric discussion.

The multiplicity of regulators, and having similar products regulated by different regulators, leading to regulatory arbitrage and conflict between regulators was flagged off as an important concern. Turf wars between SEBI and the insurance regulator and the fact that we have a separate pension regulator when asset management companies will manage the pension funds were cited as examples.

A prominent view was that the lack of coordination between regulators was the key reason for conflicts and inappropriate regulation. And coordination was missing because regulatory bodies had become sinecures for retired bureaucrats who, often, bagged these posts without any relevant experience in the sector. These appointees were then expected to decide on complex, technical and developing issues—a tough act even for those with decades of experience in a given sector. This would not have mattered if regulators were accountable to parliament. Unfortunately, even the standing committees of parliament do not exert any clout because very few members have domain knowledge of, or interest in, regulation, good governance or consumer protection.

In the past year, the appointment of SEBI chairman has been the subject of multiple litigations. There is now a move to extend the term of the current incumbent through an executive decision. Such ugly controversies can be avoided if key appointments are validated by parliament or a select parliamentary committee as is done in the US.

Many panel members felt that the FSLRC’s (Financial Sector Legislative Reforms Committee) recommendation has provided answers to many of these issues by proposing a unified regulator. Unfortunately, dissenting notes by three of the FSLRC’s key members marred the report. One would have thought that a committee as eminent as the FSLRC, which operated on a generous public budget, would have understood the need to hammer out a consensus and present a set of unanimous and unequivocal recommendations. We also find it strange that FSLRC made almost no effort to engage with consumers or consumer organisations in the financial sector.

Prithvi Haldea, chairman of Prime Database group, raised a very significant issue. He pointed out that the absence of a systematic data collection, analysis and interpretation mechanism, that could feed into policy- and regulation-making, is resulting in poor regulation and a lack of regulatory predictability. Mr Haldea’s www.watchoutinvestors.com has been providing yeoman’s service to consumers by publishing orders of a slew of regulatory agencies, quasi-regulatory and self-regulatory organisations in the financial sector and those under the ministry of corporate affairs. Watchoutinvestors.com is doing the job that the government and our regulators ought to be doing, in creating this goldmine of collated, cleaned and standardised information which can be the basis of significant academic research and policy-making. Instead, regulators hardly give the work its due and Mr Haldea says he, often, receive threats and requests to remove regulatory orders posted on the website.

Citing an example of how data capture can improve regulation, Mr Haldea pointed out that promoters, often, reclassify themselves as public investors in order to sidestep regulations and disclosure rules. They also change the classification repeatedly, without any fear of detection, since regulators have no mechanism to track the mischief. In one case detected by Mr Haldea, a promoter had changed his classification from promoter to public investor as many as five times. In the absence professional data-mining, there is no scope for detecting or acting on early warning signals thrown up by these corporate actions.

We, at Moneylife, believe that data-mining and analysis that Mr Haldea refers to, especially with regard to information filed with the registrar of companies, is critical to detect and act against thousands of ponzi schemes or direct marketing scams that are looting gullible Indians everyday.

What was evident from this discussion was that almost every regulatory change that would be considered imperative to true consumer protection would be opposed by corporate lobbies as well as government bureaucrats who enjoy a five-year extension to the power and perks they draw at the highest level. A quick data check would also reveal that all top regulators spend over half of their time on foreign tours. This leaves little time for serious consumer protection. The result is that we have endless articulation and forced spending on ‘financial literacy’, but very little action on the ground.

Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]

User

COMMENTS

sathyacumaran

3 years ago

sathya cumaran
operational head india
singapore media and channel group
in the country like india where customers are really fools and their interest is nevr taken into consideration the only motto of business house is to cheat their customers and govt interest is to earn as much as they can for their future generations that is reason why the sons and daughters of politician fight among themselves for power and moeny and end theri life

R P SHIVKUMAR

3 years ago

Brokers are famous for thier misselling to earn brokerage. I had a very bad experience with India Infoline about 6 years back. I had given them Rs 1 lakh to invest in the market after they had come to my home and promised they will give me guaranteed returns of 15 %. I had told them to make only investments and not trade. But the company's franchises used to trade daily in the market and earned brokerage but i did not earn anything. My mistake was that i relied on them and did not stop the pratice. The result was that i lost all my money in January 2008 crash due to overtrading and mismanagement.I had complained to NSE but lost the case as nothing could be proved. There have been other complaints against India Infoline who had won the award as best broker in Asia.
The rules are against small investors who rely on the name of the broker and are thus cheated.
Similar is the case with insurance companies
R P Shivkumar
[email protected]
9820213945

REPLY

Dayananda Kamath k

In Reply to R P SHIVKUMAR 3 years ago

it is not only brokers even the regulator and ministry of finance is hand in glow in this system. that is why there is mass looting going on in financial market.

Sucheta Dalal

In Reply to R P SHIVKUMAR 3 years ago

Mr Shivkumar. You are just the profile of persons who led us to start Moneylife foundation. It is a not-for-profit organisation. I would urge you to go to our website http://foundation.moneylife.in and watch some of our videos under events. It will help you not to get cheated.
As for your insurance issue, you will find hundreds like you. If you write to moneylife, do register under the insurance helpline - it is free. you will find details in the right hand column right here!

nagesh kini

In Reply to R P SHIVKUMAR 3 years ago

never give money or a carte blanche to trade by way of a p/a.just order them to buy shares of aaa companies, monitor them with their advice and sell them at the appropriate time or simply hold on to collect dividends and bonus. pms is for people who have idle money to throw around and not for you and me!

sreenath

In Reply to R P SHIVKUMAR 3 years ago

sathyacumaran
operational head india
singapore media and channel group
I have solid proof such my letters for issueing physical contract slips and ledger and holding statment and revocation of POA and margin fudning AND non issuance of Delivery insitruction booklet inspite of this the sebi nse bse are not taking the case this shows that these insitution are waste or infact our indian adminsitration is so weak that corruption at all levels inculding the adminsitrative services and this shows how weak is the indian govt and now we have decided to expose this episode of maladminsitration to international court to expose about indian adminsiteation before that we need moneylife support india infoline and reliance securities had cheated me we need jsutice

sreenath

3 years ago

sathyacumaran
I would like to bring it the notice of Money life that NSE BSE SEBI Never do any justice to the individual investors even the IGRP meeting where the judges are unaware of the rules and regulations of the stock exchanges even what ever the rules they knew if they put forth to stock broking representative inspite of the stock broking firm representative accepting that they have not compiled the rules of the stock exchanges in front of the Exchange staff neither the exchange staff nor the IGRP judges have any authroity to issue show cause notice to broking firm we feel that these IGRP judges are those Advocates who donot have any practice and who loiter in the court complex for cases and they are in favour of broking houses for which they would be sufficently rewarded for softpeddaling the issue and more over the broking firms inspite of lapses on their side they try to use the Police force to keep the investors at check and as sn investor and affected person we request the moneylife to take this issue and restore justice to the client is humbly messaGe given to Madam Suchetra Dalal

REPLY

Dayananda Kamath k

In Reply to sreenath 3 years ago

fully agree. i had the same experience when i filed a complaint with mrtpc.even though the broker has given it in writing that what i have complained is happening. the mrt lawyer or the judge could not take that into account to decide the case. even mrtpc did not make sebi a party to the case.even today i dont know what happened to the cse filed by mrtpc on my coplaint. and i was called as witness.

Dayananda Kamath k

3 years ago

unless the regulator understands their main purpose and duty it is of no use bringing out their failures. regulators are for after retirement posting to the beurocrates and bank chairmans and financial institutions executives. the revnue to them is generated by the participant institutions and not by the small investors so they have vested interest to protect these institutions. so they make a web of rules so that small investor is duped by quoting one or the other rule and institutions are provided with an escape route legally. this is todays rules and laws being enacted.

REPLY

sreenath

In Reply to Dayananda Kamath k 3 years ago

sathyacumaran
why cannot the moneylife take this issue when we file an compliant in sebi or nse bse they appoint some advocates who donot w=have any knowledge about the subject and they say to go for arbitration when the case never warrants for arbitration but we can bring this episode to media lime light as our FM shri PC rightly said only 2% of the population are into the market if we bring that also that would also would vanish and inflation would crop to three digit as well wisher of indian economy and country we request RBI and MCA to look into matter and solve this issue before any catstrophe could take place

sreenath

In Reply to Dayananda Kamath k 3 years ago

sathyacumaran
hai dayananda kamath the regulators main duty to brake the law framed by them because only the chairmans are appointed from the panel who are close to ruling party and who polish the shoes the politican and down below staff are govt employee either recurited by UPSC or CAT such as professional like CA MBA and other management institutions and they are bothered about their position and authroity and the stock broking house legal fertinity are mainly law brakers and these staff of sebi nse bse knew the law brakers inorder to get their personal benefit they softpeddal the issue and as such we feel that justice is denied in capital market sector as rightly said PC our FM where only 2% of the toatl population are into stock market that to would be washed in course unless justice is done as an international journalist and also an member of AAP we are now mobilising and movement to restore justice in capital market sector we need your supprot

Dayananda Kamath k

In Reply to sreenath 3 years ago

sure i am prepared to support and also provide the material. i am fighting these issues since last 10 years. has sent some material even to aap office also.

nagesh kini

In Reply to Dayananda Kamath k 3 years ago

mr. kamath your 10 year battle will go on for ever our regulators are just tooth less tigers that can neither bark nor bite. they levy heavy penalties only to get them watered down in appeal. you are fighting a loosing battle!

nagesh kini

3 years ago

The consumer interests are always seen to be the last in the order of priorities and more often than not totally absent too.
Notwithstanding SEBI Chairman Sinha saying "Big or small, all culprits same."
Reminds me of what George Orwell wrote in his Animal Farm ".. but some are more equal than others." Like RIL challenging SEBI decision for not considering consent settlement to get away without admitting guilt!

REPLY

sreenath

In Reply to nagesh kini 3 years ago

sathyacumaran
CHairman of SEBI or RBI are appointed by the central govt who will abide by the rules and regulations of central govt and these officials IAS and IPS inorder to have their power and position they lic the shoes of politician this ia an pitiable condition in india even if there are any straight forward IAS or IPS officers they would be shuntted out to unimportant post and as such the constitution should be amended in such manner that Administration and Politics should be separated there should be apex body for Indian administrative service like an act passed in Parliament and they should be full pwoers like Election commission or Supreme court or CAG then only we can route out the corruption from india till then officals corruption and braking of rules and regualtions owuld be common we request moenylife fight for our cause hats off to them

sreenath

3 years ago

sathyacumaran
operatrional head india
singapore media and channel group
the Indian capital market sector especially stock market and their controlling authorities like sebi nse and bse does not have any ethics or they are intrested in implemetning the law infact we can rightly say the law makers are the law brakers for firnge benefits they derive from the stock broking firms either monetary or non monmetary this is becuase when the unscurpulous politician who in their tenure of five years loot the country and officials who are guiding them in their loot are also tempted to loot and as such in indian adminstrative system earlier there was only saying that there is no accountability but in present scenario we can say there is no honesty no integrity and no morale because our legal system is so weak and prolonging issue that people attitude to forget the issue is rampant unless the media and channel continuously monitor its difficult even the organisation like money life who are fighitng for investors right are threatened by big stock broking houses and also from official missioneries from sebi nse and bse alos from MCA to softpeddal for future election if such is case where is question of justice is the case minority retail investors condition is pitable and among them is mine also hope after reading this we expect some justice otherwise only GOD should save our country from the cluthces of corruption and thsoe culprits should be taught an lesson which is happening in the current session in my case India infoline stock broking firm had cheated to exten of rs 25 crores and this case was dragging for eight long years without any clue and now NSEEL the Spot exchange had cheated IIFL to extent of rs 300 crore this is an official figure announced by IIFLbut unofficially it would have exceeded Rs 1500 crore to be frankly saying there is GOD above us who is watching all our activity and rightly punishes and this fitting example after learing this i request IIFL to consider and refund my rs 25 crore plus interst without further delay hope that would be done

P M Ravindran

3 years ago

'Judicial system has not been able to meet even the modest expectations of the society. Its delays and costs are frustrating, its processes slow and uncertain. People are pushed to seek recourse to extra-legal methods for relief. Trial system both on the civil and criminal side has utterly broken down.' Also, 'Thus we have arrived at a situation in the judicial administration where courts are deemed to exist for judges and lawyers and not for the public seeking justice'.-REPORT OF THE NATIONAL COMMISSION TO REVIEW THE WORKING OF THE CONSTITUTION.

If that is the condition of our courts the quasi judicial organisations are worse. In fact the Consumer 'courts' established under the Consumer Protection Act has actually turned the Act into Consumer Persecution Act! For some telling examples please read my blog at http://raviforjustice.blogspot.in/2011/1...

REPLY

nagesh kini

In Reply to P M Ravindran 3 years ago

I entirely agree. I had filed a complaint against the then Indian Airlines Corporation for refund against lost air ticket, possibly the only complaint that the refund was ordered and paid followng the District Forum verdict, IAC went in appeal to the State Forum that upheld it. IAC took it to the National Forum
on a technical ground that the IAC "constituted a state" it was upheld but with strictures passed!

Dayananda Kamath k

In Reply to P M Ravindran 3 years ago

that is the reason rahul gandhi wants for every trivial issue bring a law so that you can go on fighting in courts of law paying hefty fees to lawyers and even judges and your case will go on for ever.this country do not need laws it needs prper implimentation of existing laws.

Abhijit Gosavi

3 years ago

Does this lack of regulation also explain why the Mumbai stock market is so unreliable? It came as a shock to me recently when I learned that index funds in India do worse than managed mutual funds. The reverse is true in most mature/robust stock markets.

SuchindranathAiyerS

3 years ago

Putting consumers at the center would interfere with suborning the resources of the State to the personal pelf, pleasure, pomp and power of India's ruling elites?

Vaibhav Dhoka

3 years ago

Here CONSUMER or AAM Admi has no voice is his/her,their condition is like Guinea Pig which are used in lab testing.

nagesh kini

3 years ago

You're bang on Sucheta.
"Protecting consumers" is the least of the priorities of any of the service providers as also their multiple regulators who pay only lip services.
The govt. and the Planning Commission are seen only to multiply/increase the numbers of the so-called Regulators who have proven they are toothless tigers and watch dogs that can neither bark nor bite.
Even the Consumer Disputes Redressal Fora are no better than judicial courts - they blame lack of infrastructral support.
The poor aam admi consumer is left to fend for him/herself as the Members of the Regulators enjoy safe sinecures and perks!

Fortnightly Market View: Crosswind

A complex interplay of macro factors is making Sensex, Nifty move erratically, especially...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Engineered row in US-India relations, an attention diversion tactics of big brothers?—Part 18

The Devyani Khobragade row appears to be a motivated act ahead of a verdict of the US District Court pointing out the unconstitutionality of NSA program of indiscriminately collecting electronic data

In the context of the current row between governments of the US and India, did our President and the Prime Minister wonder as to how US companies like Accenture which have been awarded contract for so called de-duplication of  ‘big data’ of Indians by Unique Identification Authority of India (UIDAI) can use the data to the disadvantage of Indians? It is reliably learnt that Ministry of External Affairs (MEA) had raised concerns against biometric UID project as well. 
 

Responding to a question on what should a journalist choose when there is a conflict between truth and national interest, without pausing even for a moment one Professor of journalism from a university in US who visited Indian Institute of Mass Communication (IIMC) in 1999-2000 said, journalists should choose national interest. Clearly, truth is a casualty not only in war but also in journalism.
 

One has repeatedly heard it said that most of US media in general are an extension of the foreign policy of government of US as they consistently indulge in jingoistic reporting. One is witnessing the same in the current row in US-India relations. Indian media is doing the same.
 

What media in US, India and elsewhere in general seems to be failing to see through is that it is an engineered rift to create a miasma wherein the new disclosures about the 5-Eyes alliance of five English-speaking countries (US, UK, Australia, Canada and New Zealand) for the purpose of sharing intelligence does not occupy centre stage. These disclosures of classified information were made by Edward Snowden, a former contractor at US’ National Security Agency (NSA). The row might be aimed at taking this expose off the public memory. It is information warfare of sort. This alliance is directed against countries like India. Under the agreement among the alliance members interception, collection, acquisition, analysis, and decryption is conducted by each of them for an automatic sharing of intelligence.
 

This alliance comprises of the US National Security Agency (NSA), the United Kingdom’s Government Communications Headquarters (GCHQ), Canada’s Communications Security Establishment Canada (CSEC), the Australian Signals Directorate (ASD), and New Zealand’s Government Communications Security Bureau (GCSB). The intelligence partnership was formed in the aftermath of the Second World War ahead of transfer of power to India by UK. These “eyes” did not need to infiltrate India’s intelligence system because they were embedded there from the outset. Given such a backdrop, the entry of cyber Trojan horses in modern communications systems deployed by these  Indian  agencies cannot be ruled out because there is nothing in public domain to suggest that it was debugged. Not surprisingly, officials  of Indian intelligence agencies have been seceding to join the alliance of these “eyes” with remarkable ease. In view of the same, the conception of converging “the entire country into one single communication entity” introduced in 1975 with the help of a UN agency whose complicity with these “five eyes” stands exposed needs to be revisited.  
 

Besides the Five Eyes with the addition of Denmark, France, the Netherlands and Norway, it becomes a 9-Eyes alliance for conducting espionage. The role of the media houses like BBC, Reuters, Associated Press etc from these countries which form part of the alliances merits rigorous content analysis to examine whether or not the alliance of their native countries influences their reporting or not.
 

The Devyani Khobragade row  appear to be a motivated act ahead of the verdict of the US District Court for the District of Columbia pointing out the unconstitutionality of NSA program of indiscriminately collecting electronic data to take the public attention away from this verdict. It has been revealed that our prime minister, president and almost all the ministers have all been under the surveillance of NSA.
 

The verdict was passed on 16 December 2013. The verdict attempts to safeguard the interests of citizens of USA. This is not applicable to non-US citizens because US laws do not recognize the rights of privacy of non-US citizens to be sacrosanct.  This implies that rights of privacy of Indian citizens do not have protection either under the Indian laws, US laws or any international law at present.
 

It must be noted that companies like Ernst & Young (E&Y), UK and Safran Group (of France) who have got contract from UIDAI are from the countries which are part of this alliance. The core question is that if our President and Prime Minister appear seemingly unperturbed in the face of glaring evidence of they having been subject of surveillance, how they can be trusted for safeguarding the right to privacy of citizens? Had it not been an election year, it is quite likely that they would not have protested against the arrest and body cavity search of Devyani Khobragade, India’s Deputy Counsel General in New York.  Had this not been the case the concerned authorities and ruling parties would have reacted similarly in the incidents concerning Dr. A. P. J. Abdul Kalam, George Fernandes, Hardeep Singh, and Shah Rukh Khan to name a few.
 

It is evident that India’s geostrategic position in relation to the US in particular and all its alliance members in general have been compromised by politicians who have kept personal interest above national interest. Proceedings of Indian Parliament bear witness to the prevarications of the politicians of the ruling party in the matter of the arrest, release and extradition of Warren Anderson, former chief executive (CEO) of Union Carbide Corp (UCC), of US who faces criminal case in India for having caused industrial genocide in Bhopal and who is currently an absconder under Indian laws. There is documentary evidence accessed through Right to Information (RTI) that reveals that several of the serving ministers including an industrialist have wrongly argued that UCC’s inheritor, Dow Chemicals Co, US does not have any liability for the Bhopal genocide. Even the current leader of the opposition and a member of Parliament (MP) from Bharatiya Janata Party (BJP) and party’s spokesperson gave a written legal opinion along with Congress MP and spokesperson of the party to this effect. In the aftermath of Devyani Khobragade episode one wonders that had Indian politicians sought Anderson’s extradition and fixed the liability of UCC without resorting to uncalled for quid pro quo, such incidents of taking Indians and Indian officials for granted would not have happened.  
 

Once again the sincerity of the statements made by political leaders across parties faces a litmus test as to whether it is an empty posturing meant only for public consumption when the election campaigns are underway or they are honestly concerned about safeguarding the prestige of the country and its national interest.
 

In a seemingly unrelated but relevant development, on 5 December 2013 Economic Times reported that India’s Intelligence Bureau (IB) has questioned issuing of UID/Aadhaar number to the foreigners and refugees from other countries. Notably, it is not clear as to how many citizens of the nine countries of the intelligence gathering alliance are currently residing in India.  IB raised these objections on 6 November 2013 at a meeting of senior officials of the investigative agency, the home ministry and UIDAI. The UIDAI has argued that any non-resident Indian (NRI) or foreign citizen living in India can apply for Aadhaar since it is only meant for establishing identity and not citizenship.
 

This submission of UIDAI is an exercise in sophistry. The fact is that UIDAI is working with Election Commission of India to merge the electoral database with the Centralized Identity Data Repository (CIDR) of UID/Aadhaar numbers. Relying on prime minister’s patronage UIDAI appears to be taking even IB for a ride.  Ministry of Home Affairs (MHA) is rightly arguing that since ultimately both CIDR of UIDAI and National Population Register (NPR) data of MHA is going to be collated the issue of citizenship is likely to get confounded. What is apparent is that this confusion is part of the design and not a product of default. IB is right in seeking background checks of private players involved with the UIDAI. It must be done before it is too late or before it becomes structurally subservient to foreign agencies due to the unfolding ‘solutions architecture’.
 

In the verdict of US District Court, Judge Richard Leon rules, “I cannot imagine a more "indiscriminate" and "arbitrary invasion" than this systematic and high-tech collection and retention of personal data on virtually every single citizen for purposes of querying and analyzing it without prior judicial approval. Surely such a program infringes on "that degree of privacy" that the founders enshrined in the Fourth Amendment. Indeed I have little doubt that the author of our Constitution, James Madison, who cautioned us to beware of "the abridgement of freedom of the people by gradual and silent encroachments by those in power," would be aghast.” Madison, the fourth President of USA is considered the father of US Constitution. The 68-page verdict is attached.  
 

This verdict is readily applicable to the “indiscriminate” biometric and demographic databases being created in India by the Planning Commission’s UIDAI and MHA’s Registrar General & Census Commissioner for NPR  besides National Intelligence Grid (NATGRID), the Indian incarnation of NSA. Framers of Constitution of India too would be “aghast” at such “systematic and high-tech collection and retention of personal data on virtually every single citizen for purposes of querying and analyzing it without prior judicial approval.” Indeed these initiatives along with the bitterly opposed proposal of National Counter Terrorism Centre (NCTC) and Goods and Services Tax (GST) Network constitutes “abridgement of freedom of the people by gradual and silent encroachments by those in power” in our country.
 

In an RTI reply dated 5 December 2013, UIDAI shared the contract agreement it signed on behalf of the President of India acting through Director General of UIDAI, Planning Commission, Government of India (which is the employer) on 17 March 2010 with the consortium consisting of Ernst & Young Pvt Ltd and Netmagic Solutions Pvt Ltd wherein ‘M/s Ernst & Young Pvt Ltd’ is the lead partner and Consultant. Both the RTI applications were filed by Qaneez-e-Fathemah Sukhrani, an urban affairs researcher.  The contract agreement has page numbers only till page no. 26 but the rest of the pages which are appendices including description of services, clarifications of RFP dated 4 January 210 related to RFP, description of methodology, reporting requirements, total cost of services duties of the employer, teaming agreements with consortium partner/individual experts, RFP of UID CIDR Consultant issued by the employer and the pre-qualification, technical and commercial proposal submitted by the Consultant are not numbered.      
 

The description of approach and methodology given the Appendix A: Part C dealing with Contract –UID CIDR Consultant contract agreement with Ernst & Young, a company based in UK, one of the alliance members of Five Eyes interestingly begins with the talisman of Mahatma Gandhi about pondering over how the poorest can get “control over his life and destiny” restored and will have us believe that this is its inspiration to participate in this initiative.

In an earlier RTI reply dated 25 October 2013, UIDAI shared that Ernst & Young order date was 26 February 2010 wherein the value of the contract was mentioned as Rs7.05 crore. The contract agreement with Ernst & Young states that “the Unique ID will be a random 12-digit number with the basis for establishing uniqueness of identity being biometrics”. It announces that “we will provide a Unique Identity to over 113.9 crore people.” This is evidently a fraudulent announcement because UIDAI with which the agreement has been signed has mandate to provide Unique Identity to only 60 crore residents of India and not to 113.9 crore people. The agreement states that it proposes to adopt political, economic, social, technology, legal and environment (PESTLE) framework to cover all key dimensions of the UID program. This framework merits attention for it tantamount to rewriting the political geography of the country with hitherto unknown consequences for political rights.
 

Most startling disclosure from the contract agreement is its admission that “biometric systems are not 100 % accurate”. It admits that “uniqueness of the biometrics is still a postulate.” In an admission that pulverizes the very edifice on which UID/Aadhaar and the NPR rests, it writes, “The loss in information due to limitations of the capture setup or physical conditions of the body, and due (to) the feature representation, there is a non-zero probability that two finger prints or IRIS prints coming from different individuals can be called a match.”  The contract agreement underlines it in bold letters. There appears to be an attempt at verbal gymnastics to hide the key message here. In simple words, “non-zero probability that two finger prints or IRIS prints” turning out to be a match means that there is a probability that biometric data of two different individuals can be identical.
 

With this admission which is rooted in scientific evidence articulated earlier as part of this series, there emerges  a compelling logic to abandon the exercise of creating database of biometric data for identification in favour of pre-existing 15 identity proofs on which Election Commission of India relies for elections and which has been giving legality and legitimacy to the Parliament and the Government of India.            
   

It has been reported based on disclosures of Snowden that US and UK intelligence forces have hacked and planted spyware on more than 50,000 computer networks worldwide and their number is expected to reach over 85,000 by the end of 2013.
 

In view of the same, in place of counting the numbers of those residents of India enrolled/imprisoned under biometric Aadhaar and NPR at their own cost, national energy ought to focus on questions which have huge ramifications like:
 

Does the Parliament and State Assemblies know as to how many citizens of UK, US, Canada, Australia, New Zealand, Denmark, France, the Netherlands and Norway are currently residing in India at present? How many of them are non-traceable?
 

How many of them are within the country on a valid visa and a valid passport?
 

How many companies from UK, US, Canada, Australia and New Zealand are currently operating in India at present?
 

Are Indian agencies and citizens aware that the Five Eyes have “focused cooperation” on mining of computer networks with other countries like Belgium, Italy, South Korea, Turkey and others?
 

This alliance has the capability to directly access internet companies’ data, tapping international fibre optic cables, sabotaging encryption standards and standards bodies, hacking the routers, switches and firewalls that connect the internet together. The facts about their tentacles being present in these countries have been brought to light after the disclosures by Snowden.
 

Does the conduct of these countries and their companies serve India’s national interest?
Do the interests of these countries and companies converge with our interests
?
 

In such a backdrop, instead of continuing with imperial initiatives like biometric Aadhaar and NPR that relies on the companies based in the countries who comprise five eyes alliance, government of India, Indian citizens and political parties need to deal with the attention diversion tactics of this alliance in a deeper and non-conventional manner to undo the harm done by their cyber and non-cyber Trojan horses. The verdict of US District Court against NSA merits the attention of Supreme Court of India when it hears the case against biometric identification based UID/Aadhaar.   
 

You may also want to read…

 

Why biometric identification of citizens must be resisted? Part I
 

Biometric identification is modern day enslavement -Part II
 

Biometric profiling, including DNA, is dehumanising -Part III
 

Marketing and advertising blitzkrieg of biometric techies and supporters -Part IV
 

History of technologies reveals it is their owners who are true beneficiaries -Part V
 

UID's promise of service delivery to poor hides IT, biometrics industry profits –Part VI
 

Technologies and technology companies are beyond regulation? -Part VII
 

Surveillance through biometrics-based Aadhaar –Part VIII
 

Narendra Modi biometrically profiled. What about Congress leaders?-Part IX
 

Aadhaar: Why opposition ruled states are playing partner for biometric UID? -Part X

 

Is Nandan Nilekani acting as an agent of non-state actors? –Part XI

 

Aadhaar and UPA govt's obsession for private sector benefits–Part XII

 

Are Indians being used as guinea pigs of biometric technology companies? -Part XIV
 

Aadhaar: Is the biometric data of human body immortal and ageless? Part XV
 

Aadhaar: The propaganda of transnational vested interests –Part XVI

 

Aadhaar: Pakistan handed over, India giving database on a platter– Part XVII

 

 

(Gopal Krishna is member of Citizens Forum for Civil Liberties (CFCL), which is campaigning against surveillance technologies since 2010)

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)