Centre for Internet and Society

Workshop on Democratic Accountability in the Digital Age (Delhi, November 14-15)

sumandro — 2016-12-15T09:27:22Z

IT for Change, along with Centre for Internet and Society (CIS), Digital Empowerment Foundation (DEF), Mazdoor Kisan Shakti Sangathan (MKSS) and National Campaign for People’s Right to Information (NCPRI), is organising a two day workshop on ‘Democratic Accountability in the Digital Age’. The workshop will focus on evolving a comprehensive policy approach to data based governance and digital democracy, grounded in a rights and social justice framework. It will be held at the United Service Institution of India, Delhi, during November 14-15, 2016. The CIS team to participate in the workshop includes Sumandro Chattapadhyay (speaker), Amber Sinha (speaker), Vanya Rakesh (participant), and Himadri Chatterjee (participant).

The workshop aims to:

Discuss the institutional norms, rules and practices appropriate to the rise of ‘governance by networks’ and ‘rule by data’ that can guarantee democratic accountability and citizen participation, and
Articulate the steps to claim the civic-public value of digital technologies so that data and the new possibilities for networking are harnessed for a vibrant grassroots democracy.

We hope the workshop can create a civil society coalition that can build effective strategies for legal and policy reform to further participatory democracy in the digital age. On the first day, the workshop will set the context through knowledge sharing and thematic presentations and discussions. On the second day, we aim to concretize strategies for collective action to further democratic accountability in the digital age.

Workshop Agenda (PDF)

Background Note (ODT)

For more details visit https://cis-india.org/internet-governance/events/workshop-on-democratic-accountability-in-the-digital-age-delhi-november-14-15

Workshop on Big Data in India: Benefits, Harms, and Human Rights (Delhi, October 01)

vanya — 2016-09-28T05:53:55Z

CIS welcomes you to participate in the workshop we are organising on Saturday, October 01 at India Habitat Centre, Delhi, to discuss benefits, harms, and human rights implications of big data technologies, and explore potential research questions. A quick RSVP will be much appreciated.

Workshop invitation: Download (PDF)

Workshop agenda: Download (PDF)

In the last few years, there has been an emergence of the discourse of big data viewing it as an instrument not just for ensuring efficient, targeted and personalised services in the private sector, but also for development, social and policy research, and formalising and monetising various sections of the economy. This possibility is premised upon the idea that there is great knowledge that resides in both traditional and new forms of data made possible by our digital selves, and that we may now have the capability to tap into that knowledge for insights across diverse sectors like healthcare, finance, e-governance, education, law enforcement and disaster management, to name but a few. Alongside, various commentators have also pointed to the new problems and risks that big data could create for privacy of individuals through greater profiling, for free speech and economic choice by strengthening monopolistic tendencies, and for socio-economic inequalities by making existing disparities more acute and facilitating algorithmic bias and exclusion.

From a regulatory perspective, big data technologies pose fundamental challenges to the national data regulatory frameworks that have existed since many years. The nature of collection and utilisation of big data, which is often not driven by immediate purpose of the collected data, conflict with the principles of data minimisation and collection limitation that have been integral to data protection laws globally. This compels us to revisit existing theories of data governance. Additionally, use of big data in public decision-making highlights the question of how algorithmic control and governance must be regulated. This raises concerns around taking determining a balanced position that recognises the importance of big data, including for development actions, and ensures unhindered innovation with simultaneous focus on greater transparency and anonymisation to protect individual privacy, and various big data risks faced by population groups. In order to answer these questions, we need to begin with identifying the different harms and benefits of big data that could arise through its use across sectors and disciplines, especially in the context of human rights.

This workshop is designed around an extensive study of current and potential future uses of big data for governance in India that CIS has undertaken over the last year. The study focused on key central government projects and initiatives like the UID project, the Digital India programme, the Smart Cities Challenge, etc.

We will initiate the workshop with a detailed presentation of our findings and key concerns, which will then shape the discussion agenda of the workshop. We look forward to discuss aspects of big data technologies through the entry points of harms, opportunities, and human rights.

The final session of the workshop will focus on identifying key research questions on the topic, and exploring potential alliances of scholars and organisations that can drive such research activities.

We look forward to making this a forum for knowledge exchange for our friends and colleagues attending the discussion and discuss the opportunity to for potential collaboration.

RSVP: Please send an email to Ajoy Kumar at <ajoy@cis-india.org>.

Organisers: Amber Sinha <amber@cis-india.org> and Sumandro Chattapadhyay <sumandro@cis-india.org>.

For more details visit https://cis-india.org/internet-governance/events/big-data-in-india-benefits-harms-and-human-rights-oct-01-2016

Workshop on 'Privacy after Big Data' (Delhi, November 12)

sumandro — 2016-11-12T10:14:52Z

The Centre for Internet and Society (CIS) and the Sarai programme, CSDS, invite you to a workshop on 'Privacy after Big Data: What Changes? What should Change?' on Saturday, November 12. This workshop aims to build a dialogue around some of the key government-led big data initiatives in India and elsewhere that are contributing significant new challenges and concerns to the ongoing debates on the right to privacy. It is an open event. Please register to participate.

Invitation note and agenda: Download (PDF)

Venue and RSVP

Venue: Centre for the Study of Developing Societies 29, Rajpur Road, Civil Lines, Delhi 110054.

Location on Google Maps: https://www.google.com/maps/place/CSDS/@28.677775,77.2162523,17z/.

Registration: Complete this form.

Concept Note

In this age of big data, discussions about privacy are intertwined with the use of technology and the data deluge. Though big data possesses enormous value for driving innovation and contributing to productivity and efficiency, privacy concerns have gained significance in the dialogue around regulated use of data and the means by which individual privacy might be compromised through means such as surveillance, or protected. The tremendous opportunities big data creates in varied sectors ranges from financial technology, governance, education, health, welfare schemes, smart cities to name a few.

With the UID (“Aadhaar”) project re-animating the Right to Privacy debate in India, and the financial technology ecosystem growing rapidly, striking a balance between benefits of big data and privacy concerns is a critical policy question that demands public dialogue and research to inform an evidence based decision.

Also, with the advent of potential big data initiatives like the ambitious Smart Cities Mission under the Digital India Scheme, which would rely on harvesting large data sets and the use of analytics in city subsystems to make public utilities and services efficient, the tasks of ensuring data security on one hand and protecting individual privacy on the other become harder.

As key privacy principles are at loggerheads with big data activities, it is important to consider privacy as an embedded component in the processes, systems and projects, rather than being considered as an afterthought. These examples highlight the current state of discourse around data protection and privacy in India and the shapes they are likely to take in near future.

This workshop aims to build a dialogue around some of the key government-led big data initiatives in India and elsewhere that are contributing significant new challenges and concerns to the ongoing debates on the right to privacy.

Agenda

09:00-09:30 Tea and Coffee

09:30-10:00 Introduction

Mr. Amber Sinha and Mr. Sandeep Mertia
This session will introduce the topic of the workshop in the context of the ongoing works at CIS and Sarai.

10:00-11:00 From Privacy Bill(s) to ‘Habeas Data’

Dr. Usha Ramanathan and Mr. Vipul Kharbanda
This session will present a brief history of the privacy bill(s) in India and end with reflections on ‘habeas data’ as a lens for thinking and actualising privacy after big data.

11:00-11:30 Tea and Coffee

11:30-12:30 Digital ID, Data Protection, and Exclusion

Ms. Amelia Andersdotter and Mr. Srikanth Lakshmanan
This session will discuss national centralised digital ID systems, often operating at a cross-functional scale, and highlight its implications for discussions on data protection, welfare governance, and exclusion from public and private services.

12:30-13:30 Digital Money and Financial Inclusion

Dr. Anupam Saraph and Ms. Astha Kapoor
This session will focus on the rise of digital banking and online payments as core instruments of financial inclusion in India, especially in the context of the Jan Dhan Yojana and UPI, and reflect on the concerns around privacy and financial data.

13:30-14:30 Lunch

14:30-15:30 Big Data and Mass Surveillance

Dr. Anja Kovacs and Mr. Matthew Rice
This session will reflect on the rise of mass communication surveillance across the world, and the evolving challenges of regulating il/legal surveillance by government agencies.

15:30-16:15 Privacy is (a) Right

Mr. Apar Gupta and Ms. Kritika Bhardwaj
This brief session is to share initial ideas and strategies for articulating and actualising a constitutional right to privacy in India.

16:15-16:30 Tea and Coffee

16:30-17:30 Round Table

An open discussion session to conclude the workshop.

Speakers

Mr. Amber Sinha

Amber works on issues surrounding privacy, big data, and cyber security. He is interested in the impact of emerging technologies like artificial intelligence and learning algorithms on existing legal frameworks, and how they need to evolve in response. Amber studied humanities and law at National Law School of India University, Bangalore.

E-mail: amber at cis-india dot org.

Twitter: @ambersinha07.

Ms. Amelia Andersdotter

Amelia Andersdotter has been a Member of the European Parliament. She works on practical implications of data protection laws and consumer information security in Sweden, and digital rights in the Europe in general. Presently she is residing in Bangalore, where she is a visiting scholar with Centre for Internet and Society. She holds a BSc in Mathematics.

URL: https://dataskydd.net.

Twitter: @teirdes.

Dr. Anja Kovacs

Dr. Anja Kovacs directs the Internet Democracy Project in Delhi, India, which works for an Internet that supports free speech, democracy and social justice in India and beyond. Anja’s research and advocacy focuses especially on questions regarding freedom of expression, cybersecurity and the architecture of Internet governance. She has been a member of the of the Investment Committee of the Digital Defenders Partnership and of the Steering Committee of Best Bits, a global network of civil society members. She has also worked as an international consultant on Internet issues, including for the Independent Commission on Multilateralism, the United Nations Development Programme Asia Pacific and the UN Special Rapporteur on Freedom of Expression, Mr. Frank La Rue, as well as having been a Fellow at the Centre for Internet and Society in Bangalore, India.

Internet Democracy Project: https://internetdemocracy.in.

Twitter: @anjakovacs.

Dr. Anupam Saraph

Anupam Saraph has extensively researched India's UID number that has been widely regarded as the game changer in development programs. It has come to be linked with both public and private databases and become the requirement for access to entitlements, benefits, services and rights. Dr. Saraph, who has the design of at least two identification programs to his credit has researched the UID’s functional creep since its inception.

He has been dissecting the myths of what the UID is or is not. He has also tracked the consequences of its linkages on databases that protect national security, sovereignty, democratic status and the entire banking and money system in India. He has also highlighted the implications of its use for targeted delivery of cash subsidies from the Consolidated Fund of India. He has written and lectured widely about the devastating impact of the UID number on development programs, national security and the governability of India.

As a Professor of Systems, Governance and Decision Sciences, Environmental Systems and Business he mentors students and teaches systems, information systems, environmental systems and sustainable development at universities in Europe, Asia and the Americas. He has worked with the Rensselaer Polytechnic Institute, Rijksuniversitiet Groningen, RIVM, University of Edinburgh, Resource Use Institute, Systems Research Institute among others. Dr. Saraph has had the unique distinction of being India’s only person who has held the only office of a City CIO in India, in a PPP arrangement with government, industry and himself. He has also been the first e-governance Advisor to a State government. Dr. Saraph has held CxO and ministerial level positions and serves as an independent director on the boards of Public and Private Sector companies and NGOs. He is also the President of the Nagrik Chetna Manch, an NGO charged with the mission to bring accountability in governance.

Dr. Saraph is also actively engaged in civil society where he participates in several environmental, resource and nature conservation initiatives, has authored draft legislations for river and natural resource conservation, right to good governance and has contributed to governance, election and democratic reforms. Dr. Saraph is a regular columnist in newspapers and writes on issues of governance, future design, technology and education from a systems perspective.

As a future designer and recognized as a global expert on complex systems he helps individuals and organisations understand and design the future of their worlds. Together they address the toughest challenges, accomplish missions and achieve business goals. He also supports building capacity to address the challenges of today as well as to build future designs through teams and effective leadership. Since the eighties Dr. Saraph has modeled complex systems of cities, countries, regions and even the planet. His models have been awarded internationally and even placed in 10-year permanent exhibitions.

Dr Saraph works with business and government executives, civil society leaders, politicians, generals, civil servants, police, trade unionists, community activists, United Nations and ASEAN officials, judges, writers, media, architects, designers, technologists, scientists, entrepreneurs, board members and business leaders of small, mid and large single and trans-national companies, religious leaders and artists across a dozen countries and various industry sectors to help them and their organisations succeed in their missions. He advises the World Economic Forum through its Global Agenda Council for Complex Systems and the Club of Rome, Indian National Association as a founder life member.

Dr Saraph holds a PhD in designing sustainable systems from the faculty of Mathematics and Natural Sciences of the Rijksuniversiteit Groningen, the Netherlands.

Website: http://anupam.saraph.in.

Twitter: @anupamsaraph.

Mr. Apar Gupta

Apar Gupta practices law in Delhi. He is also one of the co-founders of the Internet Freedom Foundation. His work and writing on public interest issues can be accessed at his personal website www.apargupta.com.

Twitter: @aparatbar.

Ms. Astha Kapoor

Astha Kapoor is a public policy strategy consultant working on financial inclusion and digital payments. Currently, she is working with MicroSave. Her tasks involve a focus on government to people (G2P) payments - and her work spans strategy, advisory and evaluation with the DBT Mission, Office of the Chief Economic Advisor, NITI Aayog and ministries pertaining to food, fuel and fertilizer. She recently designed a pilot to digitize uptake of fertilizers in Krishna district, and evaluated the newly introduced coupon system in the Public Distribution System in Bengaluru.

Twitter: @kapoorastha.

Ms. Kritika Bhardwaj

Kritika Bhardwaj works as a Programme Officer at the Centre for Communication Governance (CCG), National Law University, Delhi. Her main areas of research are privacy and data protection. At CCG, she has written about the privacy implications of several contemporary issues such as Aadhaar (India's unique identification project), cloud computing and the right to be forgotten. A lawyer by training, Kritika has a keen interest in information law and human rights law.

Centre for Communication Governance, NLU Delhi: http://ccgdelhi.org.

Twitter: @Kritika12.

Mr. Matthew Rice

Matthew Rice is an Advocacy Officer at Privacy International working across the organisation engaging with international partners and strengthening their capacity on communications surveillance issues. He has previously worked at Privacy International as a consultant building the Surveillance Industry Index, the largest publicly available database on the private surveillance sector ever assembled. Matthew graduated from University of Aberdeen with an LLB (Hons.) and also has an MA in Human Rights from University College London.

Privacy International: https://privacyinternational.org.

Twitter: @mattr3.

Mr. Sandeep Mertia

Sandeep Mertia is a Research Associate at The Sarai Programme, Centre for the Study of Developing Societies, Delhi. He is an ICT engineer by training with research interests in Science & Technology Studies, Software Studies and Anthropology. He is conducting an ethnographic study of emerging modes of data-driven knowledge production in the social sector.

Sarai: http://sarai.net.

Twitter: @SandeepMertia.

Academia: https://daiict.academia.edu/SandeepMertia.

Mr. Srikanth Lakshmanan

Srikanth is a software professional with interests in Internet, follower of Internet policy discussions, volunteers for multiple online campaigns related to Internet. He is also fascinated by FOSS, opendata, localization, Wikipedia, maps, public transit, civic tech and occasionally contributes to them.

Site: http://www.srik.me.

Twitter: @logic.

Mr. Vipul Kharbanda

Vipul Kharbanda is a consultant with the Center for Internet and Society, Bangalore. After finishing his BA.LLB.(Hons.) from National Law School of India University in Bangalore, he worked for India’s largest corporate law firm for two and a half years in their Mumbai office for two years working primarily on the financing of various infrastructure projects such as Power Plants, Roads, Airports, etc. Since quitting his corporate law job, Vipul has been working as the Associate Editor in a legal publishing house which has been publishing legal books and journals for the last 90 years in India. He has also been involved with the Center for Internet and Society as a Consultant working primarily on issues related to privacy and surveillance.

For more details visit https://cis-india.org/internet-governance/events/privacy-after-big-data-delhi-nov-12-2016

WISER Lecture : Sumandro Chattapadhyay on Deregulation by Code

praskrishna — 2017-03-29T11:48:08Z

University of the Witwatersrand organized a talk by Sumandro Chattapadhyay on Derugulation by Code on March 8, 2017 in Johannesburg.

On November 08, 2017, the Government of India initiated a demonetisation process. It involved cancellation of Rs. 500 and Rs. 1,000 currency notes as legal tender, establishing of a time bound process for the notes to be returned to the banks, announcement of specific emergency services (such as hospitals and utilities) for which the canceled notes could still be used, and introduction of a new Rs. 2,000 note. While the purpose of the demonetisation move was publicly articulated in terms of removal of unaccounted wealth held in cash form, the state narrative quickly moved to being primarily focused on promotion of various forms of digital payments, especially mobile-based payments. The notion of a "WhatsApp moment" in Indian banking in particular, and in Asian banking in general, has been in circulation since 2015. Nandan Nilekani, a significant technocrat politician of India who has been CEO of Infosys (a major Indian IT company) and the Chairman of the UID/Aadhaar project, was one of the first persons to take note of this upcoming "revolution". In a lecture given by him on August 21, 2015, he described the technological and market forces, enabled by policy decision, that are going to disrupt the Indian banking landscape.

Sumandro's lecture discussed the linkages between this WhatsApp moment and the demonetisation move, and locate them in the context of institutional and technological changes happening in the Indian banking sector since 2008. The talk focused on the development and proliferation of the Unified Payments Interface - an universal, private-owned, government-backed, mobile-to-mobile payment infrastructure - as the key instrument through which the ongoing deregulation of banking in India is being driven.

For more details visit https://cis-india.org/internet-governance/news/wiser-lecture-sumandro-chattapadhyay-on-deregulation-by-code

Vulnerabilities in the UIDAI Implementation Not Addressed by the Aadhaar Bill, 2016

Pooja Saxena and Amber Sinha — 2016-03-21T08:33:53Z

In this infographic, we document the various issues in the Aadhaar enrolment process implemented by the UIDAI, and highlight the vulnerabilities that the Aadhaar Bill, 2016 does not address. The infographic is based on Vidushi Marda’s article 'Data Flow in the Unique Identification Scheme of India,' and is designed by Pooja Saxena, with inputs from Amber Sinha.

Download the infographic: PDF and PNG.

Credits: The illustration uses the following icons from The Noun Project - Thumpbrint created by Daouna Jeong, Duplicate created by Pham Thi Dieu Linh, Copy created by Mahdi Ehsaei.

License: It is shared under Creative Commons Attribution 4.0 International License.

For more details visit https://cis-india.org/internet-governance/blog/vulnerabilities-in-the-uidai-implementation-not-addressed-by-the-aadhaar-bill-2016

UIDAI and Welfare Services: Exclusion and Countermeasures (Bangalore, August 27)

sumandro — 2016-08-22T13:25:03Z

The Centre for Internet and Society (CIS) invites you to a one day workshop, on Saturday, August 27, 2016, to discuss, raise awareness of, and devise countermeasures to exclusion due to implementation of UID-based verification for and distribution of welfare services. We look forward to making this a forum for knowledge exchange and a learning opportunity for our friends and colleagues.

Invitation

Download (PDF)

Venue

Institution of Agricultural Technologists, No. 15, Queen’s Road, Bangalore, 560 052.

Location on Google Map: https://www.google.com/maps/place/Institution+of+Agricultural+Technologists/.

Agenda

10:00-10:30 Tea and Coffee

10:30-11:00 Introductions and Updates from Delhi Workshop

11:00-12:45 Reconfiguration of Welfare Governance by UIDAI

12:45-14:00 Lunch

14:00-15:00 Updates on Ongoing Cases against UIDAI

15:00-15:15 Tea and Coffee

15:15-16:45 Open Discussion on Countering Welfare Exclusion

16:45-17:00 Tea and Coffee

For more details visit https://cis-india.org/internet-governance/events/uidai-and-welfare-services-exclusion-and-countermeasures-aug-27

The Last Chance for a Welfare State Doesn’t Rest in the Aadhaar System

sumandro — 2016-04-19T13:18:42Z

Boosting welfare is the message, which is how Aadhaar is being presented in India. The Aadhaar system as a medium, however, is one that enables tracking, surveillance, and data monetisation. This piece by Sumandro Chattapadhyay was published in The Wire on April 19, 2016.

Originally published in and cross-posted from The Wire.

Once upon a time, a king desired that his parrot should be taught all the ancient knowledge of the kingdom. The priests started feeding the pages of the great books to the parrot with much enthusiasm. One day, the king asked the priests if the parrot’s education has completed. The priests poked the belly of the parrot but it made no sound. Only the rustle of undigested pages inside the belly could be heard. The priests declared that the parrot is indeed a learned one now.

The fate of the welfare system in our country is quite similar to this parrot from Tagore’s parable. It has been forcefully fed identification cards and other official documents (often four copies of the same) for years, and always with the same justification of making it more effective and fixing the leaks. These identification regimes are in effect killing off the welfare system. And some may say that that has been the actual plan in any case.

The Aadhaar number has been recently offered as the ‘last chance’ for the ailing welfare system – a last identification regime that it needs to gulp down to survive. This argument wilfully overlooks the acute problems with the Aadhaar project.

Firstly, the ‘last chance’ for a welfare state in India is not provided by implementing a new and improved identification regime (Aadhaar numbers or otherwise), but by enabling citizens to effectively track, monitor, and ensure delivery of welfare, services, and benefits. This ‘opening up’ of the welfare bureaucracy has been most effectively initiated by the Right to Information Act. Instead of a centralised biometrics-linked identity verification platform, which gives the privilege of tracking and monitoring welfare flows only to a few expert groups, an effective welfare state requires the devolution of such privilege and responsibility.

We should harness the tracking capabilities of electronic financial systems to disclose how money belonging to the Consolidated Fund of India travel around state agencies and departmental levels. Instead, the Aadhaar system effectively stacks up a range of entry barriers to accessing welfare – from malfunctioning biometric scanners, to connectivity problems, to the burden of keeping one’s fingerprint digitally legible under all labouring and algorithmic circumstances.

Secondly, authentication of welfare recipients by Aadhaar number neither make the welfare delivery process free of techno-bureaucratic hurdles, nor does it exorcise away corruption. Anumeha Yadav has recently documented the emerging ‘unrest at the ration shop’ across Rajasthan, as authentication processes face technical and connectivity delays, people get ‘locked out’ of public services for not having or having Aadhaar number with incorrect demographic details, and no mechanisms exist to provide rapid and definitive recourse.

RTI activists at the Satark Nagrik Sangathan have highlighted that the Delhi ration shops, using Aadhaar-based authentication, maintain only two columns of data to describe people who have come to the shop – those who received their ration, and those who did not (without any indication of the reason). This leads to erasure-by-design of evidence of the number of welfare-seekers who are excluded from welfare services when the Aadhaar-based authentication process fails (for valid reasons, or otherwise).

Reetika Khera has made it very clear that using Aadhaar Payments Bridge to directly transfer cash to a beneficiary’s account, in the best case scenario, may only take care of one form of corruption: deception (a different person claiming to be the beneficiary). But it does not address the other two common forms of public corruption: collusion (government officials approving undue benefits and creating false beneficiaries) and extortion (forceful rent seeking after the cash has been transferred to the beneficiary’s account). Evidently, going after only deception does not make much sense in an environment where collusion and extortion are commonplace.

Thirdly, the ‘relevant privacy question’ for Aadhaar is not limited to how UIDAI protects the data collected by it, but expands to usage of Aadhaar numbers across the public and private sectors. The privacy problem created by the Aadhaar numbers does begin but surely not end with internal data management procedures and responsibilities of the UIDAI.

On one hand, the Aadhaar Bill 2016 has reduced the personal data sharing restrictions of the NIAI Bill 2010, and has allowed for sharing of all data except core biometrics (fingerprints and iris scan) with all agencies involved in authentication of a person through her/his Aadhaar number. These agencies have been asked to seek consent from the person who is being authenticated, and to inform her/him of the ways in which the provided data (by the person, and by UIDAI) will be used by the agency. In careful wording, the Bill only asks the agencies to inform the person about “alternatives to submission of identity information to the requesting entity” (Section 8.3) but not to provide any such alternatives. This facilitates and legalises a much wider collection of personal demographic data for offering of services by public agencies “or any body corporate or person” (Section 57), which is way beyond the scope of data management practices of UIDAI.

On the other hand, the Aadhaar number is being seeded to all government databases – from lists of HIV patients, of rural citizens being offered 100 days of work, of students getting scholarships meant for specific social groups, of people with a bank account. Now in some sectors, such as banking, inter-agency sharing of data about clients is strictly regulated. But we increasingly have non-financial agencies playing crucial roles in the financial sector – from mobile wallets to peer-to-peer transaction to innovative credit ratings. Seeding of Aadhaar into all government and private databases would allow for easy and direct joining up of these databases by anyone who has access to them, and not at all by security agencies only.

When it becomes publicly acceptable that the money bill route was a ‘remedial’ instrument to put the Rajya Sabha ‘back on track’, one cannot not wonder about what was being remedied by avoiding a public debate about the draft bill before it was presented in Lok Sabha. The answer is simple: welfare is the message, surveillance is the medium.

Acceptance and adoption of all medium requires a message, a content. The users are interested in the message. The message, however, is not the business. Think of Free Basics. Facebook wants people with none or limited access to internet to enjoy parts of the internet at zero data cost. Facebook does not provide the content that the users consume on such internet. The content is created by the users themselves, and also provided by other companies. Facebook own and control the medium, and makes money out of all content, including interactions, passing through it.

The UIDAI has set up a biometric data bank and related infrastructure to offer authentication-as-a-service. As the Bill clarifies, almost all agencies (public or private, national or global) can use this service to verify the identity of Indian residents. Unlike Facebook, the content of these services do not flow through the Aadhaar system. Nonetheless, Aadhaar keeps track of all ‘authentication records’, that is records of whose identity was authenticated by whom, when, and where. This database is gold (data) mine for security agencies in India, and elsewhere. Further, as more agencies use authentication based on Aadhaar numbers, it becomes easier for them to combine and compare databases with other agencies doing the same, by linking each line of transaction across databases using Aadhaar numbers.

Welfare is the message that the Aadhaar system is riding on. The message is only useful for the medium as far as it ensures that the majority of the user population are subscribing to it. Once the users are enrolled, or on-boarded, the medium enables flow of all kinds of messages, and tracking and monetisation (perhaps not so much in the case of UIDAI) of all those flows. It does not matter if the Aadhaar system is being introduced to remedy the broken parliamentary process, or the broken welfare distribution system. What matters is that the UIDAI is establishing the infrastructure for a universal surveillance system in India, and without a formal acknowledgement and legal framework for the same.

For more details visit https://cis-india.org/internet-governance/blog/the-last-chance-for-a-welfare-state-doesnt-rest-in-the-aadhaar-system

The Dangers Of Aadhaar-Based Payments That No One Is Talking About

praskrishna — 2017-01-17T14:39:53Z

Less than three months ago, India’s banking sector was hit by a data breach which compromised 32 lakh debit cards and led to fraudulent transactions worth Rs 1.3 crore.

The article by Mayank Jain was published by Bloomberg on January 17, 2017. Sunil Abraham was quoted.

The incident started a debate around security of payment systems. But the debate had just about begun when the government’s demonetisation decision dragged attention away from it. Now as the dust settles and as the government starts to push newer means of digital payments, the focus is back on the security of systems being seen as an alternative to cash.

One such system is Aadhaar-based payments which could potentially allow citizens to pay anytime anywhere with the tap of a finger.

In theory, it sounds simple.

The Aadhaar-based payment system runs on the existing Aadhaar infrastructure through which a person’s biometrics are used to authenticate the user. Once authenticated, the user can transfer funds directly from one bank account to another without going through a mobile wallet or a card.

The payment system requires a smartphone, a working internet connection and a biometric authentication device with the merchant. The customer needn’t have a card or a phone as long as he or she has an Aadhaar-seeded bank account.

National Payments Corporation of India has developed this payments infrastructure over the existing Aadhaar-Enabled Payments System, the railroad on which the public distribution system has been functioning for years now.

Amitabh Kant, chief executive officer of the government policy think tank NITI Aayog said, earlier this month, that all cards and point-of-sale machines will become redundant in the country in the next two-and-a-half years as Aadhaar-based payments become popular.

A Double-Edged Sword

While payments authenticated by biometrics sound like a good idea in a country where less than one in three people actually own a smartphone, there are fears that integrating biometrics with digital payments could prove to be a security headache.

The first part of the problem is that Aadhaar, while effective, is not a fool-proof method of authentication and identification failures are not uncommon. Building a payment system atop the Aadhaar system will simply transfer some of these vulnerabilities.

The possibility of transaction failures due to a biometric mismatch are real, admitted a former high-ranking official from the Unique Identification Authority of India (UIDAI) who spoke to BloombergQuint on the condition of anonymity.

Officially, the false reject rate – rejection of a biometric when it’s actually correct – is set at a maximum of 2 percent for devices that get certified from the UIDAI. On the ground, however, failure rates vary widely, said the official quoted above.

According to the official statistics on UIDAI, more than 16 lakh Aadhaar-authentication requests failed in the past week. The type of errors encountered ranged from the biometric data not matching the database to demographic details not checking out.

The failure rates on Aadhaar Enabled Payment System for interbank transactions (which is a part of all Aadhaar authentication requests) were found to be as high as 60 percent by the Watal Committee on digital payments which published its report in December.

Additionally, newer security threats may also emerge if the scope of Aadhaar is widened. These include identity theft if a person’s biometrics are compromised from the payment system, phishing attempts, and the difficulty in revoking access once biometric information is compromised.

Biometrics aren’t an exact science, the official quoted above said, while adding that possible glitches have to be weighed against the benefits of offering a widely accessible non-cash mode of payment to citizens.

How Easy Is It To Beat The System?

Sunil Abraham, executive director of Bangalore based research organisation Center for Internet and Society (CIS) said that one way to assess how secure a system is to understand the cost and effort that goes into breaching it.

In the case of Aadhaar-based payment systems, the costs may not be high.

“There’s the gummy finger method which essentially requires some Fevicol or gum to duplicate someone’s fingerprint which can be enough to transact on someone’s behalf without them being there,” said Abraham in a phone conversation with BloombergQuint. “An average person can’t clone a smart card. Just fevicol and glue can help you make a gummy finger. The biometric lobby will say that advanced scanners defeat the gummy finger attack but more advanced scanners are also more expensive.”

Also, using more sensitive devices could push up the instance of false rejection of transactions, said Abraham.

There are other concerns. Like the fact that devices used for Aadhaar identification could store personal information, which, in turn, could be susceptible to a breach.

There are five main components in an Aadhaar app transaction – the customer, the vendor, the app, the back-end validation software, and the Aadhaar system itself. There are also two main external concerns – the security of the data at rest on the phone and the security of the data in transit. At all seven points, the customer’s data is vulnerable to attack.
Bhairav Acharya, Program Fellow, New America

Acharya, who works at a U.S.-based think tank called New America and focuses on cyber-law, said the key concern is that Aadhaar data can be stolen and misused.

“The app and validation software are insecure, the Aadhaar system itself is insecure, the network infrastructure is insecure, and the laws are inadequate.”

The biometric data collected on the authentication device at a merchant location can potentially be stored on the device as well as the smartphone of a merchant for a long time. Abraham added that there is a possibility that non-certified devices will enter the market, which can store data and use it in the future to do fraudulent transactions.

The concerns over potential misuse of biometric data by private agencies has also been highlighted by the Supreme Court of India. Earlier this month, the apex court refused to expedite the hearing on a petition regarding Aadhaar being utilised for multiple use cases by private companies. It, however, observed that private agencies collecting biometric data “is not a great idea”.

Deficient Privacy Laws

Apar Gupta, a Delhi-based lawyer working on cyber security, says that the lack of strong privacy protecting provisions is another concern that should be kept in mind while moving towards an Aadhaar-based payment system.

“The data stays for a long time with the stakeholders in the system. The requesting agency can keep it for seven years and the UIDAI can store it for five years. There are insufficient safeguards and there’s an absence of privacy law and an independent privacy regulator,” he said.

Acharya agreed.

India does not have the necessary laws to deal with a decentralised, biometrically-authenticated, mobile payments system, according to Acharya.

“Moreover, current laws and policies regarding the Aadhaar project, particularly the centralised database, are inadequate from the point of view of data security and end-user privacy,” he said.

Abraham of CIS said the issue is wider than Aadhaar. The problem is the lack of a strong data security law.

We only have a minimal data security law under the Section 43A of the Information and Technology Act which only applies to the private sector. There’s no law that applies to the government. Even 43A has not been applied consistently. There’s no place for you to go and complain if your identity has been compromised.
Sunil Abraham, Executive Director, Centre for Internet & Society

Gupta noted that, in the event of an identity threat, avenues of recourse are also limited. He said the best option is an appeal in the civil court, which is a long drawn out process.

In final analysis, according to Abraham, credit and debit cards are easier to secure as access can be revoked quickly.

“The trouble with biometrics is that the chain of trust is harder to establish because too many people can get access to biometrics and then you need to devise these convoluted solutions like hardware secure zones,” Abraham said.

“So the advantage of going with a smart card is that it can be easily re-secured, but with biometrics, once I compromise it, it’s lifelong.”

For more details visit https://cis-india.org/internet-governance/news/bloomberg-mayank-jain-january-17-2017-dangers-of-aadhaar-based-payments-that-no-one-is-talking-about

The Aadhaar Act is Not a Money Bill

Amber Sinha — 2016-04-25T10:51:37Z

While the authority of the Lok Sabha Speaker is final and binding, Jairam Ramesh’s writ petition may allow the Supreme Court to question an incorrect application of substantive principles. This article by Amber Sinha was published by The Wire on April 24, 2016.

Originally published by The Wire on April 24, 2016.

Since its introduction as a money bill in the Lok Sabha in the first week of March [1], the Aadhaar (Targeted delivery of Financial and other subsidies, benefits and services) Bill, 2016 has been embroiled in controversy. The Lok Sabha rejected the five recommendations of the Rajya Sabha and adopted the bill on March 16 and only presidential assent was required for it become to become valid law. However, former Union Minister Jairam Ramesh filed a writ petition contesting the decision to treat the Aadhaar Bill as a money bill. The petition is due to be heard before the Supreme Court on April 25, and should the court decide to entertain the petition, it could have far-reaching implications for the Aadhaar project and the manner in which money bills are passed by the Parliament.

There are three broad categories of bills (all legislations or Acts are known as ‘bills’ till they are passed by the Parliament) that the Parliament can pass. The first kind, Constitution Amendment Bills, are those that seek to amend a provision in the Constitution of India. The second are financial bills which contain provisions on matters of taxation and expenditure. Money bills are a subset of the financial bills which contain provisions only related to taxation, financial obligations of the government, expenditure from or receipt to the Consolidated Fund of India and any matters incidental to the above. The third category is of ordinary bills which includes all other bills. The process for the enactment of all these bills is different. Money bills are peculiar in that they can only be introduced in the Lok Sabha where it can be passed by simple majority. Following this, it is transmitted to the Rajya Sabha. The Rajya Sabha’s powers are restricted to giving recommendations on the Bill and sending it back to the Lok Sabha, which the Lok Sabha is under no obligation to accept. The decision to introduce the Aadhaar Bill as a money bill has been widely seen as an attempt to circumvent the Rajya Sabha where the ruling party is in a minority.

Article 110 (1) of the Constitution defines a money bill as one containing provisions only regarding the matters enumerated or any matters incidental to them. These are a) imposition, regulation and abolition of any tax, b) borrowing or other financial obligations of the Government of India, c) custody, withdrawal from or payment into the Consolidated Fund of India (CFI) or Contingent Fund of India, d) appropriation of money out of CFI, e) expenditure charged on the CFI or f) receipt or custody or audit of money into CFI or public account of India. Article 110 is modelled on Section 1(2) of the (UK) Parliament Act, 1911 which also defines the money bills as those only dealing with certain enumerated matters. The use of the word “only” was brought up by Ghanshyam Singh Gupta during the Constituent Assembly Debates. He pointed out that the use of the word “only” limits the scope of money bills to only those legislations which did not deal with other matters. His amendment to delete the word “only” was rejected clearly establishing the intent of the framers of the Constitution to keep the ambit of money bills extremely narrow.

While the Aadhaar Bill does make references to benefits, subsidies and services funded by the Consolidated Fund of India (CFI), even a cursory reading of the bill reveals its main objectives as creating a right to obtain a unique identification number and providing for a statutory apparatus to regulate the entire process. The mere fact of establishing the Aadhaar number as the identification mechanism for benefits and subsidies funded by the CFI does not give it the character of a money bill. The bill merely speaks of facilitating access to unspecified subsidies and benefits rather than their creation and provision being the primary object of the legislation. Erskine May’s seminal textbook, ‘Parliamentary Practice” is instructive in this respect and makes it clear that a legislation which simply makes a charge on the Consolidated Fund does not becomes a money bill if otherwise its character is not that of one.

PDT Achary, former secretary general of the Lok Sabha, has expressed concern about the use of Money Bills as a means to circumvent the Rajya Sabha. He has written here [2] and here [3], on what constitutes a money bill and how the attempts to pass off financial bills like the Aadhaar Bill as money bills could erode the supervisory role Rajya Sabha is supposed to play. This is especially true in the case of a legislation like the Aadhaar Bill which has far reaching implications for individual privacy as it governs the identification system conceptualised to provide a unique and lifelong identity to residents of India dealing with both the analog and digital machinery of the state and by virtue of Section 57 of any private entities. Already over 1 billion people have been enrolled under this identification scheme, and the project has been a subject of much debate and a petition before the Supreme Court. The project has been portrayed as both the last hope for a welfare state and surveillance infrastructure. Regardless of which of the two ends of spectrum one leans towards, it is undeniable that the law governing the Aadhaar project deserved a proper debate in the Parliament. Even those who are strong proponents of the project must accept the decision to pass it off as a money bill undermines the importance of democratic processes and is a travesty on the Constitution and a blatant abrogation of the constitutional duties of the speaker.

The petition by Jairam Ramesh would hinge largely on the powers of the judiciary to question the decision of the Speaker of the Lok Sabha. Article 110 (3) is very clear in pronouncing the authority of the Speaker as final and binding. Additionally, Article 122 prohibits the courts from questioning the validity of any proceedings in Parliament on the ground of any alleged irregularity of procedure. The powers of privilege that Parliamentarians enjoy are integral to the principle of separation of powers. However, the courts may be able to make a fine distinction between inquiring into procedural irregularity which is prohibited by the Constitution; and questioning an incorrect application of substantive principles, which I would argue, is the case with the Speaker decision.

References

[1] See: http://thewire.in/2016/03/07/arun-jaitley-introduces-money-bill-on-aadhar-in-lok-sabha-24115/.

[2] See: http://indianexpress.com/article/opinion/columns/show-me-the-money-4/.

[3] See: http://www.thehindu.com/opinion/lead/circumventing-the-rajya-sabha/article7531467.ece.

For more details visit https://cis-india.org/internet-governance/blog/the-aadhaar-act-is-not-a-money-bill

Seminar on Understanding Financial Technology, Cashless India, and Forced Digitalisation (Delhi, January 24)

sumandro — 2017-01-23T13:17:19Z

The Centre for Financial Accountability is organising a seminar on "Understanding Financial Technology, Cashless India, and Forced Digitalisation" on Tuesday, January 24, at YWCA, Ashoka Road, New Delhi. Sumandro Chattapadhyay will participate in the seminar and speak on the emerging architecture of FinTech in India, as being developed and deployed by UIDAI and NPCI.

Cross-posted from Centre for Financial Accountability.

Programme Schedule

09.30 - Registration

10:00 - Introduction to the Seminar & Setting the Context

Madhuresh Kumar, National Alliance of People’s Movements

10:15–11:30 - Session 1 - Understanding the Political Context of FinTech

B P Mathur, Former Dy CAG

Prabir Purkayastha, Free Software Movement of India and Knowledge Commons

C P Chandrasekhar, Centre for Economic Studies and Planning, JNU

11:30-11:45 – Tea / Coffee break

11:45-13:15 - Session 2 - How will FinTech Impact the Poor, and Labour and Banking Sector?

Ashim Roy, New Trade Union of India

Nikhil Dey, Mazdoor Kisan Shakti Sangathan

Ravinder Gupta, General Secretary, State Bank of India Officers Association

13:15-14:00 – Lunch

14:00-15:30 - Session 3 - Understanding the Economic Context of FinTech

Indira Rajaraman, Former Director, RBI

Tony Joseph, Sr. Journalist

15:30-17:00 - Session 4 - Understanding the Architecture of FinTech: Linkages to Aadhaar, IndiaStack etc

Sumandro Chattapadhyay, the Centre for Internet and Society

Gopal Krishna, ToxicsWatch

17:00 – Tea

For more details visit https://cis-india.org/internet-governance/news/seminar-on-understanding-financial-technology-cashless-india-and-forced-digitalisation-delhi-jan-24-2017

Regulating Bitcoin in India

vipul — 2017-04-20T13:17:37Z

The article discusses the possible contours of future bitcoin regulation in India. Bitcoin, often considered a ‘notorious’ virtual currency limited only to techies or speculators, is currently fighting a battle to become a bona fide mainstream means of exchange.

While most currencies in the real world have the backing of a central authority of some kind (such as a sovereign or a Central Bank) infusing them with an air of legitimacy, Bitcoin has no such central authority which issues or controls it. Additionally, the distributed and decentralised nature of the Bitcoin network makes regulation a tricky issue. This article seeks to touch upon the issue of Bitcoin regulation and makes certain broad suggestions for the future. It is a follow-up to a previous article by this author discussing the legal treatment of Bitcoin under Indian law, available at http://cis-india.org/internet-governance/bitcoin-legal-regulation-india.

The Reserve Bank of India (RBI) has not exactly been shy in recognising and even regulating technological advances in the financial sector as is evident from their detailed guidelines on Internet Banking,[1] Prepaid Payment Instruments[2] Account Aggregator Regulations,[3] and the consultation paper on proposed regulations for P2P lending platforms,[4] etc. However, though the RBI has acknowledged the existence of Bitcoin (it issued a note cautioning the public against dealing in virtual currencies including Bitcoin way back in 2013[5] and again in 2017[6]), there have been no clear guidelines regarding the same. Nevertheless, Bitcoin has come a long way since its inception and a consensus is emerging amongst the more technically inclined individuals that Bitcoin is infact here to stay.

Even if a sceptical view is taken that Bitcoin may not last for a long time, that does not mean that regulation is useless as there is already a large amount of money invested in Bitcoin entities in India and Bitcoin exchanges seem to be betting big on this sector really taking off - especially in the backdrop of the government’s recent push towards a more digital and less cash dependent economy.

While the Indian government is trying to hard sell the idea of digital payments, primarily using existing banking channels as well as the relatively new National Payments Corporation of India (NPCI) and the various applications that are cropping up around the NPCI’s UPI platform, one must note that going digital could involve high administrative costs. These costs are typically charged by banks and intermediary merchants, and may not be palatable to all stakeholders, as was evident in the recent fracas between petrol pump owners and banks over proposed transactional charges on card payments.[7]

It is this vacuum that alternatives such as prepaid payment instruments and virtual currencies can fill while addressing the concern of high administrative charges, which is likely to be a major hurdle in going digital. Administrative charges for most of these instruments are significantly lower than what existing payment channels charge for digital transactions.[8]

Legality of Bitcoin and the need for Regulation

Bitcoin technology is being widely embraced all over the world, including neighbouring China which has become one of the biggest markets for the uniquely decentralised currency. However the biggest hurdle that Bitcoin enthusiasts see in mainstreaming this technology is the fact that most countries are treading too cautiously around Bitcoin and therefore do not have regulation governing them.

The creation and transfer of Bitcoin is based on an open source cryptographic protocol and is not managed by any central authority.[9] It is the decentralized nature of this virtual currency that makes regulation a major challenge. This does not mean that regulators are not capable of regulating Bitcoin, in fact attempts have been made in several jurisdictions but these are mostly in the discussion stage, for eg. the Washington Department of Financial Institutions (“DFI”) introduced a bill in December, 2016 which proposes amendments to certain portions of the Washington Uniform Money Services Act and includes provisions specific to digital currencies;[10] the U.S. District Court for the Southern District of New York has in a decision in September, 2016 taken the view that Bitcoin is money under the plain meaning of Section 1960, the federal money transmission statute.[11]

This article does not intend to undertake a discussion on how Bitcoin is dealt with in various jurisdictions, but instead is aimed at suggesting a possible way forward for Indian regulators to regulate Bitcoin in a manner that satisfies the regulatory zeal towards security as well as ensures that the technology does not get stifled through overregulation. It is important that the regulators create a balanced regulation because an impractical ecosystem for Bitcoin exchanges and their users, may lead to traders seeking alternative methods of purchasing Bitcoin such as P2P trading, over-the-counter (OTC) markets and underground trading platforms, which are significantly more difficult to regulate.[12]

Suggestions for Regulation

Since Bitcoin is a decentralised cryptocurrency, it is impossible to regulate it through one single centralised point for all transactions. Neither is it feasible to regulate each and every Bitcoin user. A pragmatic compromise between these two extremes could be to regulate the points at which fiat currency or valuable goods enter the Bitcoin system, i.e. the Bitcoin exchanges where people may buy and sell Bitcoin for actual real world money, or websites which offer Bitcoin as a means of payment. Such an approach would reduce the number of points of supervision and lead to effective enforcement of the regulations. The regulations may require any entity providing services such as buying and selling of Bitcoin for actual money, trading in Bitcoin (such as non-cash exchanges) or providing other Bitcoin related services (such as Bitcoin wallets, merchant gateways, remittance facilities, etc.) to be registered with a central government agency, preferably the Reserve Bank of India.

One legal issue regarding the regulation of companies transacting in Bitcoin is whether the RBI has the authority or jurisdiction to regulate Bitcoin in the first place. Without getting into the arguments regarding whether it is a dangerous trend or not, an easy way in which the RBI could ensure it has the authority to regulate Bitcoin would be to follow the path that the RBI adopted while regulating Account Aggregators under the Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016 wherein the RBI declared Account Aggregators as Non Banking Finance Companies under section 45-I(f)(iii) thereby getting the authority to regulate and supervise them under section 45JA of the Reserve Bank of India Act, 1934.

The Regulations, once issued by the Reserve Bank of India, can prescribe mandatory registration, capital adequacy provisions, corporate governance conditions, minimum security protocols, Know Your Customer (KYC) requirements and most importantly provide for regular and ongoing reporting requirements as well as supervision of the Reserve Bank of India over the activities of Bitcoin companies.

Any proposed Bitcoin regulatory framework would seek to address certain issues; for the purposes of this article, we will assume that the following three issues are the ones that must necessarily be addressed by a regulatory framework:

Security of the consumer’s property and prevention of fraud on the consumer. In the technology sector this translates into specific emphasis on increased security (against hacking) for accounts that the consumers maintain with the service provider.
India has robust exchange control laws and the inherently decentralised and digital nature of Bitcoin can enable transfer of value from one jurisdiction to another without any oversight by a central agency, potentially violating the exchange control laws of India.
Bitcoin has for long been associated with criminal and nefarious activities, infact many believe that the famous black market website “Silk Road” played a big role in making Bitcoin famous[13] and therefore preventing Bitcoin from being used for illegal activities (or creating a mechanism to ensure a digital trail to help investigations post facto) would be a major issue that the regulations would seek to tackle.

Given the above assumptions, let us examine whether the Regulations suggested above can satisfactorily address the concerns of security of consumers, exchange control, and keeping a tab on criminal activities.

If the regulations provide for minimum capital adequacy requirements as well as registration by the RBI or some other central agency, then the chances of consumers being duped by “fly-by-night” operators would be significantly reduced. The Regulations can also provide for minimum security protocols to be maintained by the companies, which protocols can themselves be developed in concert with Bitcoin experts. Critics may point to the hacking of various Bitcoin exchanges in the recent past, including that of MtGox, in which Bitcoin worth millions of dollars were siphoned off, and argue that the security protocols may not be enough to prevent future instances of hacking. But that is true even for the current security protocols for online banking; and that has not prevented a large number of banks from providing online banking facilities and the RBI regulating the same. The other vital issue that legally mandated security protocols would address (and potentially solve) is the issue of liability in case of hackings. Regulations may provide clarity on this issue and protect innocent customers from negligent companies while at the same time protecting entrepreneurs by defining and limiting the liability for bona fide and vigilant companies.

The other issue that may be of major concern to the authorities is exchange control. India has extremely specific exchange control laws, and if any person in India wants to transfer any amount to any person overseas, the only legal way to do so is through a bank transfer, which requires filling paperwork giving the reason for the transfer (although the RBI and banks usually don’t ask for any proof for small amounts upto a few lakhs). This means that all transfers outside India are done through proper banking channels and are therefore under the supervision of the RBI. However the decentralised nature of Bitcoin enables individuals to transfer money outside the borders of India without going through any banking channels and hence stay completely outside the purview of the RBI’s supervision. Such a system which lets users transfer money beyond national borders outside legal banking channels could be easily misused by nefarious actors and this is exactly what happened as international drug cartels turned to Bitcoin and other digital currencies to move their ill gotten wealth beyond the borders of various countries.[14] Regulating the entities which provide Bitcoin wallets and Bitcoin exchanges will ensure that the RBI can exercise its supervisory jurisdiction over Bitcoin transactions of individual customers even though these transactions do not go through the regular banking channels. The Regulations could impose an obligation on the companies to provide information on any suspicious activities or provide greater information about accounts which see very high volumes, etc. to ensure that Bitcoin is not used to finance organised crime. Thus, the regulations could have provisions that would require the companies providing the Bitcoin wallets or exchanges to flag and monitor customers whose trading accounts or Bitcoin wallets have transactions of an amount greater than a specified limit. This would provide the RBI with the ability to enquire as to the reasons for such high volumes and weed out illegal transactions while at the same time allowing bona fide transactions to continue.

Very closely linked to the issue of exchange control and supervision of transactions is the issue of checking the furtherance of criminal activities using the apparent anonymity offered by Bitcoin. However if the RBI has regulatory oversight over all the Bitcoin companies that are operating in India, then it would be possible for it to keep an eye on most Bitcoin transactions in India as long as the wallet that originates or terminates the transaction has been provided by a Bitcoin service provider located in India. An argument may be made that a criminal may use the services of Bitcoin wallet services provided by companies outside India and therefore outside the purview of the RBI and its regulations. However this argument may not be as plausible as it may seem at first look; if we assume that for any criminal activity the ultimate goal is to get the money in the form of recognizable legal tender (preferably cash or money in a bank account) then it stands to reason that the Bitcoin in the wallet would be exchanged for currency at some point or the other in the chain, which can only be done through a Bitcoin exchange if the transaction is of a fairly high value (which most criminal transactions are) and these exchanges as well as the accounts maintained by them will be under the purview of the RBI, thus providing the law enforcement agencies with the final link in the chain of transactions. Further, the public nature of the blockchain (the ledger where each Bitcoin trade is registered and verified) also makes it possible for the enforcement agencies to follow the trail of money for each and every Bitcoin or part thereof.

Conclusion

From the discussion above, we see that the major arguments that have been given by sceptics regarding Bitcoin and its attractiveness to criminals due to its decentralised nature are actually not very viable on a closer look. Bitcoin and the blockchain technology are extremely important steps in the direction of better and more efficient financial transactions in the global economy, which is why a number of mainstream banks are also showing a keen interest in the blockchain technology.[15] Regulations governing Bitcoin or virtual currencies would clear the air regarding their legal status so that consumers as well as entrepreneurs and investors can invest more money in this technology which could potentially change the way financial transactions are carried out across jurisdictions.

[1] https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=414&Mode=0

[2] https://rbi.org.in/scripts/NotificationUser.aspx?Id=10799&Mode=0

[3] https://www.rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=10598

[4] https://rbidocs.rbi.org.in/rdocs/content/pdfs/CPERR280416.pdf

[5] https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=30247

[6] https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=39435

[7] http://timesofindia.indiatimes.com/business/india-business/petrol-pumps-wont-accept-cards-from-monday-to-protest-banks-transaction-fee/articleshow/56402253.cms

[8] For example, currently the network fee for a person to person Bitcoin transfer is 0.0001 Bitcoin, which comes to roughly Rs. 6 per transaction irrespective of the amount involved.

[9] The processing of Bitcoin transactions is secured by servers called Bitcoin “miners”. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically using peer-to-peer filesharing technology, also known as the “blockchain”. The integrity and chronological order of the blockchain is enforced with cryptography. In addition to archiving transactions, each new ledger update creates some newly-minted Bitcoins.

[10] https://www.virtualcurrencyreport.com/2017/01/washington-department-of-financial-institutions-proposes-virtual-currency-regulation/

[11] https://www.virtualcurrencyreport.com/2016/09/sdny-opinion-re-bitcoin/. For a discussion on how different States and agencies in the United States deal with Bitcoin, please see Misha Tsukerman, “THE BLOCK IS HOT: A SURVEY OF THE STATE OF BITCOIN REGULATION AND SUGGESTIONS FOR THE FUTURE, Berkeley Technology Law Journal, Vol. 30:385, 2015, p. 1127, available at http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=2084&context=btlj .

[12] http://themerkle.com/why-china-isnt-interested-in-banning-bitcoin-importance-of-regulation/

[13] See generally, Nathaniel Popper, “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money”, Harper Collins, 2015.

[14] https://www.bloomberg.com/view/articles/2013-11-18/are-bitcoins-the-criminal-s-best-friend-

[15] http://www.morganstanley.com/ideas/big-banks-try-to-harness-blockchain.

For more details visit https://cis-india.org/internet-governance/blog/regulating-bitcoin-in-india

Rational Internet laws essential to fulfil India’s digital goals

praskrishna — 2016-08-15T04:13:06Z

India has emerged as a digitally-connected nation but experts suggest the country still lacks pragmatic Internet laws.

The article by Krishna Makwana was published by Deccan Chronicle on August 14, 2016. Sunil Abraham was quoted.

According to a report by Internet and Mobile Association of India, our country has approximately 400 million Internet users. Given the fact that we now prevail in the digital age, the government needs to work towards devising an unbiased internet policy for helping budding entrepreneurs and businesses.

Though the government, under its Digital India initiative, has addressed manifold problems over the past year, the ambiguous internet laws in the country have had a drastic effect on businesses and individuals.

Sunil Abraham, Executive Director of Centre for Internet Society, said, “There are three categories of laws which we must consider. One, speech regulation laws –- here we tend to be more repressive in comparison to other mature democracies. Two, intellectual property law which can enable or undermine access to knowledge -– here we are quite progressive and we must thank our policymakers for their foresight. Three, privacy and data protection laws –- these are incomplete, outdated or missing -– this not only undermines the rights of citizens but also weakens our cyber security.”

Defamation and national security can be listed among other issues that have threatened free speech; there have been instances where weak Internet laws led to the defamation of several artists and authors, curbing freedom to expression.

Not only individuals but online businesses have also had to limit their potential, in order adhere to the India’s hazy Internet laws. Among others, countless websites have been blocked by the government over the past few years.

However, with proper regulation in place along with rational vigilance, many of these problems might cease to exist.

It’s essential that these issues are thought about, in-depth. The country needs to build a structure that can deliver innovation, protection and provision of one and all.

“Without improving the three important areas that I pointed out, we cannot be successful at Digital India, Make In India and Start Up India,” Abraham concluded.

For more details visit https://cis-india.org/internet-governance/news/deccan-chronicle-krishna-makwana-august-14-2016-rational-internet-laws-essential-to-fulfil-indias-digital-goals

Public Panel Discussion: Digitalisation for Social Change

praskrishna — 2016-08-19T13:47:28Z

Sunil Abraham is participating as a panelist in a discussion co-organized by Mount Carmel College, Bangalore and Friedrich-Ebert-Stiftung, India Office in Bangalore on August 22, 2016.

Welcome Remarks by Sunanda BV , Mount Carmel College, Bangalore and Patrick Ruether, Friedrich-Ebert-Stiftung, India Office

On the Panel:

Digital Solutions to social problems and development challenges or Social Entrepreneurship and digital transformation: Sunil Abraham, Centre for Internet and Society
Gendered perspective on digital transformation: Anita Gurumurthy , IT for Change
India 2030 – the change I want Maureen Almeida, Student, Mount Carmel College
Technology as best practice: Anurag Shanker, NASVI, New Delhi

Note: Each panelist will give an input for about 5-7 minutes and this will be followed by Q&A session moderated by Rakhee Bakshee, Women's Feature Service

For more info contact: Jyoti Rawal, jyoti@fesindia.org

For more details visit https://cis-india.org/internet-governance/news/public-panel-discussion-digitalisation-for-social-change

Press Release, March 15, 2016: The New Bill Makes Aadhaar Compulsory!

Amber Sinha — 2016-03-16T10:11:32Z

We published and circulated the following press release on March 15, 2016, to highlight the fact that the Section 7 of the Aadhaar Bill, 2016 states that authentication of the person using her/his Aadhaar number can be made mandatory for the purpose of disbursement of government subsidies, benefits, and services; and in case the person does not have an Aadhaar number, s/he will have to apply for Aadhaar enrolment.

Nandan Nilekani, the former chairperson of the Unique Identification Authority of India had repeatedly stated that Aadhaar is not mandatory. However, in the last few years various agencies and departments of the government, both at the central and state level, had made it mandatory in order to be able to avail beneficiary schemes or for the arrangement of salary, provident fund disbursals, promotion, scholarship, opening bank account, marriages and property registrations. In August 2015, the Supreme Court passed an order mandating that the Aadhaar number shall remain optional for welfare schemes, stating that no person should be denied any benefit for reason of not having an Aadhaar number, barring a few specified services.

The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, however, has not followed this mandate. Section 7 of the Bill states that “a person should be authenticated or give proof of the Aadhaar number to establish his/her identity” “as a condition for receiving subsidy, benefit or service”. Further, it reads, “In the case a person does not have an Aadhaar number, he/she should make an application for enrollment.” The language of the provision is very clear in making enrollment in Aadhaar mandatory, in order to be entitled for welfare services. Section 7 also says that “the person will be offered viable and alternate means of identification for receiving the subsidy, benefit or service. However, these unspecified alternate means will be made available in the event “an Aadhaar number is not assigned”. This language is vague and it is not clear whether it mandates alternate means of identification for those who choose not to apply for an Aadhaar number for any reason. The fact that it does make it mandatory to apply for an Aadhaar number for persons without it, may lead to the presumption that the alternate means are to be made available for those who may have applied for an Aadhaar number but it has not been assigned for any reason. It is also noteworthy that draft legislation is silent on what the “viable and alternate means of identification” could be. There are a number of means of identification, which are recognised by the state, and a schedule with an inclusive list could have gone a long way in reducing the ambiguity in this provision.

Another aspect of Section 7 which is at odds with the Supreme Court order is that it allows making an Aadhaar number mandatory for “for receipt of a subsidy, benefit or service for which the expenditure is incurred” from the Consolidated Fund of India. The Supreme Court had been very specific in articulating that having an Aadhaar number could not be made compulsory except for “any purpose other than the PDS Scheme and in particular for the purpose of distribution of foodgrains, etc. and cooking fuel, such as kerosene” or for the purpose of the LPG scheme. The restriction in the Supreme Court order was with respect to the welfare schemes, however, instead of specifying the schemes, Section 7 specified the source of expenditure from which subsidies, benefits and services can be funded, making the scope much broader. Section 7, in effect, allows the Central Government to circumvent the Supreme Court order if they choose to tie more subsidies, benefits and services to the Consolidated Fund of India.

These provisions run counter to the repeated claims of the government for the last six years that Aadhaar is not compulsory, nor is the specification by the Supreme Court for restricting use of Aadhaar to a few services only, reflected anywhere in the Bill. The “viable and alternate means” clause is too vague and inadequate to prevent denial of benefits to those without an Aadhaar number. The sum effect of these factors is to give the Central Government powers to make Aadhaar mandatory, for all practical purposes.

For more details visit https://cis-india.org/internet-governance/blog/press-release-aadhaar-15032016-the-new-bill-makes-aadhaar-compulsory

Press Release, March 11, 2016: The Law cannot Fix what Technology has Broken!

Japreet Grewal and Sunil Abraham — 2016-03-16T10:10:40Z

We published and circulated the following press release on March 11, 2016, as the Lok Sabha passed the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016. This Bill was proposed by finance minister, Mr. Arun Jaitley to give legislative backing to Aadhaar, being implemented by the Unique Identification Authority of India (UIDAI).

The Lok Sabha passed the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016 today. This Bill was proposed by finance minister, Mr. Arun Jaitley to give legislative backing to Aadhaar, being implemented by the Unique Identification Authority of India (UIDAI).

The Bill was introduced as a money bill and there was no public consultation to evaluate the provisions therein even though there are very serious ramifications for the Right to Privacy and the Right to Association and Assembly. The Bill has made it compulsory for an individual to enrol under Aadhaar in order to receive any subsidy, benefit or service from the Government. Biometric information that is required for the purpose of enrolment has been deemed "sensitive personal information" and restrictions have been imposed on use, disclosure and sharing of such information for purposes other than authentication, disclosure made pursuant to a court order or in the interest of national security. Here, the Bill has acknowledged the standards of protection of sensitive personal information established under Section 43A of the Information Technology Act, 2000. The Bill has also laid down several penal provisions for acts that include impersonation at the time of enrolment, unauthorised access to the Central Identities Data Repository, unauthorised use by requesting entity, noncompliance with intimation requirements, etc.

Key Issues

1. Identification without Consent

Before the Aadhaar project it was not possible for the Indian government to identify citizens without their consent. But once the government has created a national centralized biometric database it will be possible for the government to identify any citizen without their consent. Hi-resolution photography and videography make it trivial for governments and also any other actor to harvest biometrics remotely. In other words, the technology makes consent irrelevant. A German ministers fingerprints were captured by hackers as she spoke using hand gesture at at conference. In a similar manner the government can now identify us both as individuals and also as groups without requiring our cooperation. This has direct implications for the right to privacy as we will be under constant government surveillance in the future as CCTV camera resolutions improve and there will be chilling effects on the right to free speech and the freedom of association. The only way to fix this is to change the technology configuration and architecture of the project. The law cannot be used as band-aid on really badly designed technology.

2. Fallible Technology

The technology used for collection and authentication as been said to be fallible. It is understood that the technology has been feasible for a population of 200 million. The Biometrics Standards Committee of UIDAI has acknowledged the lack of data on how a biometric authentication technology will scale up where the population is about 1.2 billion. Further, a report by 4G Identity Solutions estimates that while in any population, approximately 5% of the people have unreadable fingerprints, in India it could lead to a failure to enroll up to 15% of the population.

We know that the Aadhaar number has been issued to dogs, trees (with the Aadhaar letter containing the photo of a tree). There have been slip-ups in the Aadhaar card enrolment process, some cards have ended up with pictures of an empty chair, a tree or a dog instead of the actual applicants. An RTI application has revealed that the Unique Identification Authority of India (UIDAI) has identified more than 25,000 duplicate Aadhaar numbers in the country till August 2015.

At the stage of authentication, the accuracy of biometric identification depends on the chance of a false positiveâ€” the probability that the identifiers of two persons will match. For the current population of 1.2 billion the expected proportion of duplicates is 1/121, a ratio which is far too high. In a recent paper in EPW by Hans Mathews, a mathematician with CIS, shows that as per UIDAI's own statistics on failure rates, the programme would badly fail to uniquely identify individuals in India. [1]

Endnote

[1] See: http://cis-india.org/internet-governance/blog/epw-27-february-2016-hans-varghese-mathews-flaws-in-uidai-process

For more details visit https://cis-india.org/internet-governance/blog/press-release-aadhaar-11032016-the-law-cannot-fix-what-technology-has-broken