BOOK EXCERPT

After demonetisation: Is the thrust on digital transactions a violation of privacy?

‘As governments push cashless transactions, the potential for surveillance of the citizens rise.’

In most liberal democracies, citizens have realistic fears whether the ban on cash and digitalisation of banking will erode the foundations on which the State-citizen relationship has historically been structured. An important attraction of using cash is that it leaves no trail, and ensures the privacy of transactions. On the other hand, digital transactions leave a trail and can be traced back even after decades.

In most modern legal systems, the right to personal liberty subsumes the right to privacy. Thrusting cashless and digital transactions robs citizens of this fundamental right, and this has been a matter of contention even in countries that are the home to cutting-edge innovations in financial technologies, like Switzerland. The SNB’s Zurbrügg [Fritz Zurbrügg, Vice-Chairman of the Governing Board, Swiss National Bank] articulated this deep-rooted concern in his country:

“Are my electronic payment and account data protected against unauthorised access and misuse? In other words, is my financial privacy guaranteed? In contrast to cashless payment methods, cash presents no data security problems. It offers the certainty that one’s privacy is protected. Please do not misunderstand me: the suppliers of cashless payment applications invest a great deal of money in ensuring the security of their systems, and the existing systems can generally be considered to be secure. However, the availability of cash means that anyone can decide, at any time, exactly how secure they consider it to be, and how much information they want to share with whom. Or, as my Bundesbank colleague, Carl-Ludwig Thiele, put it recently: ‘The right to informational self-determination and respect of privacy is a valuable commodity, which should not be watered down or ceded lightly.’”

The distinction between privacy and informational self-determination, which Thiele emphasises in the above quote, is a more recent outcome of the phenomenal growth of computational technology and the Internet. The early view of privacy, as enshrined in the famous Warren and Brandeis essay of 1890, was the “right to be let alone”. While the fundamental principle enshrined in the 1890 formulation remains powerful, the growth of computing technologies and the Internet over the years have meant that personal information of citizens are collected and stored by multiple agencies, public and private; this is what Nilekani referred to as a “data-rich” world.

What happens to the bits of personal information lying scattered all around? Can anyone access it without the knowledge of the individual?

If accessed without the knowledge of the individual, can it be characterised as violating the spirit of “the right to be let alone?” Consequently, the understanding of privacy has been enriched into the idea of informational self-determination, which underlined the importance of “consent” of individuals. The right to informational self-determination of an individual was defined by a German constitutional court in 1983 as follows:

“…in the context of modern data processing, the protection of the individual against unlimited collection, storage, use and disclosure of his/her personal data is encompassed by the general personal rights of the German constitution. This basic right warrants in this respect the capacity of the individual to determine in principle the disclosure and use of his/her personal data. Limitations to this informational self-determination are allowed only in case of overriding public interest.”

In sum, inside a cashless and digital world of finance, it is not just the right to privacy that is potentially violated. The right to informational self-determination is also violated. This is the reason why activists demand both a privacy law and a data protection law that go hand-in-hand. A country like India, unfortunately, has neither a privacy law nor a data protection law.

There are two further issues. One, in competitive market societies, can personal information be turned into a commodity for private profiteering? If yes, it may be tantamount to the commodification of the person itself. Two, given that enormous amounts of personal information will be available to the State, can the State misuse it to target dissenting citizens and monitor their everyday activities? If yes, the outcome would be a surveillance state, where the assumed trust between the citizen and the State breaks down. As governments push cashless transactions, the potential for surveillance of the citizens rise. In countries like India with no privacy or data protection legislations, the threat is only more real.

A major threat to privacy and informational self-determination in India comes from Aadhaar, the country’s massive unique identity scheme.

Here, all Indian residents are provided a unique identification number linked to their demographic particulars and biometrics – photograph, fingerprints and iris scans. On the one hand, the government has been forcing the hands of citizens to compulsorily register for an Aadhaar number and “seed” it into the service providing agencies. On the other hand, it has been trying to “leverage” Aadhaar to create a cashless economy.

The UIDAI has, for years, been working in close coordination with multiple private providers of cashless payment instruments such as credit cards, debit cards, mobile banking and digital wallets. After demonetisation, the government also launched a new mobile application – Bharat Interface for Money (BHIM) based on the UPI – to encourage electronic payments through mobile devices. The efforts to render Aadhaar ubiquitous in a cashless world has strengthened fears of commodification of personal data as well as the entrenchment of a surveillance State.

In a financial ecosystem driven by Aadhaar, there are also strong and genuine fears of exclusion of the poor. In Aadhaar-based cashless transactions, fingerprints of users are used to authenticate individual identities. However, given that a large share of India’s population is involved in manual labour and the share of the elderly in the population structure is rising, the average quality of fingerprints is poor. As a result, as has been documented, there are large error rates in the centralised biometric authentication of beneficiaries in addition to the presence of disruptive factors like lack of electricity and poor Internet connectivity.

Even a one per cent error rate in a population of 1.2 billion implies the exclusion of more than 10 million persons. In reality, however, the error rates have been unacceptably large. The Indian government’s own Economic Survey 2016–17 presented a depressing picture in this regard:

“While Aadhaar coverage speed has been exemplary, with over a billion Aadhaar cards being distributed, some states report authentication failures: estimates include 49 per cent failure rates for Jharkhand, 6 per cent for Gujarat, 5 per cent for Krishna district in Andhra Pradesh and 37 per cent for Rajasthan. Failure to identify genuine beneficiaries results in exclusion errors.”

Biometrics are also poorly secured as an authentication token. Normally, when a password or PIN (personal identification number) is stolen or lost, the user can change the password; only the user knows the password. In contrast, biometric passwords like fingerprints cannot be changed. Fingerprints are also left behind wherever one goes and on whatever one touches. Once stolen or lost, the security of a user’s account is permanently compromised.

In other words, when Aadhaar-based biometric authentication becomes pervasive, identity thefts are likely to rise. Such glaring threats to security and freedom have not been appreciated in India before making Aadhaar compulsory for all residents and using it in financial transactions.

Typically, liberal societies need to uphold the freedom of the individual to choose his/her mode of payment.

Such a freedom of choice should be the foundational principle that guides currency management policies. For instance, according to Zurbrügg, the SNB had no plans to do away with cash in Switzerland, and:

“…moreover, it has no preference for one payment method over the other – cash or cashless. Instead, it ensures both that the demand for cash is satisfied and that cashless payments function smoothly. We are mandated by law to perform both tasks, and they have equal status. The public is therefore free to choose between cash and cashless payment methods. This is an important point. The possibility of carrying out payments is a basic prerequisite for participation in economic life, and must be available to all. It should not be attached to conditions such as the need to hold a bank account.” (Emphasis added.)

Unfortunately, the Indian liberal response to demonetisation was not distinguished by such an “enlightened” view. Liberal, and libertarian, articulations on demonetisation, which typically pitch the war on cash as adversarial to free markets and individual liberties, came not from India but from the West. Two examples should suffice.

In a January 2017 article, Steve Forbes drew parallels between demonetisation and India’s forced-sterilisation programme in the 1970s. For Forbes, a cashless economy should be created not by force but by people’s choice, and a free market economy would over time lead to a reduced use of cash. Instead, to create a cashless economy, the Indian government had committed “a massive theft of people’s property without even the pretense of due process.”

A Wall Street Journal editorial was another sharp indictment calling the imposition of a cashless society as “antithetical to economic liberty”. It argued that the policy thrust to forcefully create a cashless society was a “blunder”, and India “should respect citizens who want to keep at least some cash”. Indian liberals, it would appear, had fallen between two stools: neither able to argue for a free market nor up to the task of protecting individual liberties!

Excerpted with permission from Note Bandi: Demonetisation and India’s Elusive Chase For Black Money, Edited and Introduced by R Ramakumar, Oxford University Press.

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“My body instantly craves chai and samosa”

German expats talk about adapting to India, and the surprising similarities between the two cultures.

The cultural similarities between Germany and India are well known, especially with regards to the language. Linguists believe that Sanskrit and German share the same Indo-Germanic heritage of languages. A quick comparison indeed holds up theory - ratha in Sanskrit (chariot) is rad in German, aksha (axle) in Sanskrit is achse in German and so on. Germans have long held a fascination for Indology and Sanskrit. While Max Müller is still admired for his translation of ancient Indian scriptures, other German intellectuals such as Goethe, Herder and Schlegel were deeply influenced by Kalidasa. His poetry is said to have informed Goethe’s plays, and inspired Schlegel to eventually introduce formal Indology in Germany. Beyond the arts and academia, Indian influences even found their way into German fast food! Indians would recognise the famous German curry powder as a modification of the Indian masala mix. It’s most popular application is the currywurst - fried sausage covered in curried ketchup.

It is no wonder then that German travellers in India find a quite a lot in common between the two cultures, even today. Some, especially those who’ve settled here, even confess to Indian culture growing on them with time. Isabelle, like most travellers, first came to India to explore the country’s rich heritage. She returned the following year as an exchange student, and a couple of years later found herself working for an Indian consultancy firm. When asked what prompted her to stay on, Isabelle said, “I love the market dynamics here, working here is so much fun. Anywhere else would seem boring compared to India.” Having cofounded a company, she eventually realised her entrepreneurial dream here and now resides in Goa with her husband.

Isabelle says there are several aspects of life in India that remind her of home. “How we interact with our everyday life is similar in both Germany and India. Separate house slippers to wear at home, the celebration of food and festivals, the importance of friendship…” She feels Germany and India share the same spirit especially in terms of festivities. “We love food and we love celebrating food. There is an entire countdown to Christmas. Every day there is some dinner or get-together,” much like how Indians excitedly countdown to Navratri or Diwali. Franziska, who was born in India to German parents, adds that both the countries exhibit the same kind of passion for their favourite sport. “In India, they support cricket like anything while in Germany it would be football.”

Having lived in India for almost a decade, Isabelle has also noticed some broad similarities in the way children are brought up in the two countries. “We have a saying in South Germany ‘Schaffe Schaffe Hausle baue’ that loosely translates to ‘work, work, work and build a house’. I found that parents here have a similar outlook…to teach their children to work hard. They feel that they’ve fulfilled their duty only once the children have moved out or gotten married. Also, my mother never let me leave the house without a big breakfast. It’s the same here.” The importance given to the care of the family is one similarity that came up again and again in conversations with all German expats.

While most people wouldn’t draw parallels between German and Indian discipline (or lack thereof), Germans married to Indians have found a way to bridge the gap. Take for example, Ilka, who thinks that the famed differences of discipline between the two cultures actually works to her marital advantage. She sees the difference as Germans being highly planning-oriented; while Indians are more flexible in their approach. Ilka and her husband balance each other out in several ways. She says, like most Germans, she too tends to get stressed when her plans don’t work out, but her husband calms her down.

Consequently, Ilka feels India is “so full of life. The social life here is more happening; people smile at you, bond over food and are much more relaxed.” Isabelle, too, can attest to Indians’ friendliness. When asked about an Indian characteristic that makes her feel most at home, she quickly answers “humour.” “Whether it’s a taxi driver or someone I’m meeting professionally, I’ve learnt that it’s easy to lighten the mood here by just cracking a few jokes. Indians love to laugh,” she adds.

Indeed, these Germans-who-never-left as just diehard Indophiles are more Indian than you’d guess at first, having even developed some classic Indian skills with time. Ilka assures us that her husband can’t bargain as well as she does, and that she can even drape a saree on her own.

Isabelle, meanwhile, feels some amount of Indianness has seeped into her because “whenever its raining, my body instantly craves chai and samosa”.

Like the long-settled German expats in India, the German airline, Lufthansa, too has incorporated some quintessential aspects of Indian culture in its service. Recognising the centuries-old cultural affinity between the two countries, Lufthansa now provides a rich experience of Indian hospitality to all flyers on board its flights to and from India. You can expect a greeting of Namaste by an all-Indian crew, Indian food, and popular Indian in-flight entertainment options. And as the video shows, India’s culture and hospitality have been internalized by Lufthansa to the extent that they are More Indian Than You Think. To experience Lufthansa’s hospitality on your next trip abroad, click here.

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This article was produced by the Scroll marketing team on behalf of Lufthansa as part of their More Indian Than You Think initiative and not by the Scroll editorial team.