India’s Data Economy

Now a day’s everything is being digitalized even a ten-year-old child has a smartphone and uses the internet daily, without knowing they give their information to unknown persons. This is some cases end up in tragedy. The purpose of this research is to make the data collection method in a more secure and safe environment. Due to this pandemic, internet users have increased enormously. Due to the increased usage of internet cyber crimes have also increased exponentially. To solve these issues there are some ideas given below to improve the data economy of India.


India stands in the second position in giving data as we have an enormous population and according to a statistic source, in 2020 there were nearly 560 million internet users in India. It was also estimated that by 2023, there would be over 650 million internet users in the country. The Internet penetration rate in the country stood at around 50 percent in 2020. There has been a consistent increase in using the internet compared to just five years ago when the internet penetration rate was around 27 percent. This study shows the data taxation and how the data economy is growing in India and what are the problems faced by the public by data collection.

Data Taxation

The data collection or data taxation is very important for the state to perform its function. The data collected by the government can be used in two ways, i.e. it can be linked with other datasets to derive a new value, or it can be sold to multiple entities. This data collection has more risks as it gives every information of an individual so the most important thing is the data collected should be governed properly but how the data collected is being and what data should be redistributed and broadly the transparency and accountability comes with it.

Data Identifier

This data identifier is similar to the tax identifier as in tax identifier Permanent Account Number (PAN), bank accounts are used to track the income and levy taxes of an Organization or a single person. Likewise, in Data identifier mobile numbers, mobile IDs, Social Media account identifiers are used. The Law across the digital Platform made a data identifier as a mandate for service delivery. The Aadhaar – Mobile linkage which is an example of cross-linking, these are some examples of identifiers that are essential in certain contexts, while this has been struck down by the Supreme Court verdict on Aadhaar in Justice K.S. Puttaswamy (Retd.) and AnrvsUnion of India and Ors, 2018 SCC Online SC 1642, where section 57 of the Aadhaar Act was struck down. Aadhaar number can also be used for purposes other than stated in the Act i.e. purposes other than provided under Section 7 of the Act, as mentioned in Section 57 of the Act, which permits the State or anybody corporate or person, under any law, for the time being in force, or any contract to this effect, to use the Aadhaar number for establishing the identity of an individual. It can be used as a proof of identity, like other identity proofs such as PAN card, ration card, driving license, passport, etc.

Data taxation Systems

Data is collected both in direct and indirect ways through various systems. Income details for income tax, this socio-economic data for welfare schemes, some specific details like maternal health parameters for providing maternal and childcare, and subsidies are some direct way of collecting data by the government. Another way of collecting data be by indirect means, such as invoice providing travel history, cash transaction data, goods, and services tax (GST). The Financial Intelligence Unit, which is an executive agency, keeps this data safe from money laundering activities. The data is being shared between other governments and/or private entities, and the emerging cumulative data can be used by multiple parties.

For example as for now according to law information cannot be collected for Aadhaar, as it brings both biometric and basic identification of an individual, but it does not reveal the socio-economic status of a person. The National Population Register (NPR) has been collecting information about an individual’s caste. When Aadhaar came into existence it has become easier to the NPR for collecting data of an individual. This information stored in the state residential data hubs (SRDH).

While the caste certificate is issued, it is issued via a digital locker. The Ministry of electronics and information technology can only operate the digital locker. These caste certificates are linking with Aadhaar. As said above the Unique Identification Authority of India (UIDAI) clearly said that Aadhaar is for the basic identification of individuals and not capture information regarding the socio-economic status of an individual. From this we can clearly say that this being cross-linked which is a violation of existing law, and also amount to the profiling of a person

Data Expenditure

Some data cross-linker to generate new values or derive some information for the state to function better, like investing a portion of revenue for growth

A method called data triangulation that front revenue data are cross-linked, this method was introduced to find the tax evaders in the system by the revenue secretary of the Government of India in the recent GST Council meeting. While there are legitimate needs for cross-linking data, and excess and arbitrary cross-linking leads to 360° profiling of an individual.

The data used for planning by the government can be considered as public expenditure, sharing of data to private entities either selectively as in the case of Employees Provident Fund Organization (EPFO) or as openly in the case of the vehicle data. While the diversion of monetary values and illegal refocusing would be a scam. Even though privacy is declared as a fundamental right under Article 14, 19, and 21 of the Indian Constitution said in Justice K.S. Puttaswamy (Retd.) and Anr vs Union of India and Ors, 2018 SCC Online SC 1642, repurposing data are not treated as one.

Data-driven decision-making and evidence-based policy

An economic survey in 2019 which talks about the use of personal data for the public good the bill of personal data protection is drafted and tabled in Parliament gives the government a wide-ranging power to seek data from any data processor for evidence-based policy-making. Due to the privacy concerns, it not only raises the concern for just civil society but also from businesses, which have a sovereign state on the access to data.

Data-driven decision-making and evidence-based policy-making may sound rational it could still lead to unexpected outcomes like perpetuating the biases preexistent in the data and discount factors that are not visible in data. Every policy which is being drafted to have space for debate and democratic participation to arrive at consensus ignoring ground realities for making data-based policy would lead to disaster.

Constitutional checks and balances

A wide range of regulatory institutions and mechanisms were put in place in the 1990s when India opened up its economy. There has been a gradual adoption of technology in governance to increase transparency, by bringing forward legislation as we have matured as a democracy.

To prevent the executive overreach of the digital transformation that has been underway in India has some balances. In Aadhaar and its implementing agency UIDAI, the above said has been demonstrated several times by many problems surrounding these agencies. Below are some ideas that need discussion for putting the data economy of India and procedural system which respects the constitutional value and does not alter the relationship between the citizen and the state adverse way.

Instituting data budget and floating data Comptroller and auditor general

The budget, revenue, and expenditure of every department in the government keep it in the public domain as part of its accountability to the citizens. The government departments that is empowered to audit by the Comptroller and auditor general (CAG) is a constitutional authority. In the same way, the government needs to present the data budget, data revenue, data expenditure, and how they are managed. A plan should be made by the government the cost of junk data and trust deficit low. To ensure that data is used only for purposes prescribed by the law, in line with the values of constitutional democracy, a data CAG must be appointed and empowered to independently audit data collection.

Limitations of cross-linking

The Fiscal Responsibility and Budget Management Act, 2003 which limits and manages fiscal deficit at manageable levels are a stable fiscal environment. Like the same to manage and limit the State’s ability to cross-linked data which violates the fundamental right to privacy under Article 21 of the Indian Constitution, even if it derives an economic value for the state. Like finance of different arms of the government are reviewed and restrictions are placed, the same must be done regarding the data taxation like the balance of interest must be clearly and transparently documented, reviewed periodically.

Enhancing data federalism

The Central gives the power of the State over the data system and the move towards extreme centralization of data gives a threat to the federal polity of the country. A digital infrastructure must be built by the state to the usage of the data. This means that building an alternative system that competes for the right to privacy of the individual or organization data. Strengthening the data vault the only way to retain the rights of individuals and organizations.

Empowering citizens to question

The right of information (RTI) gives power to the citizen to request information from the government; there have been several instances where information is being denied from the ground that there was no information with the Department concerned in the form request by the person seeking the information. In this scenario, the citizen must be empowered to question and observe the metadata of the system and technology should be used to audit the data system put in place and to prevent abuse.

Strengthening Cyber security

This data taxation is especially the centralized one has a critical cyber security challenge. India does not have enough cyber security systems to prosecute cybercriminals. In 2019 nearly 32 million debit cardholders were hacked and compromised the safety of them. India needs to ramp up both its defense capability and law enforcement combat cyber war.


Thereby the author concludes that data taxation should be properly analyzed and should be transparent to the public and should the government should take for more measures regarding the data taxation so that the fundamental right to privacy under Article 21 of the Indian Constitution is not violated. In the present scenario due to this quarantine nearly every person is using the internet and giving their data to some organization, for example, most of them use Facebook but it collects data though it is encrypted it stores our data somewhere these companies don’t release our data they release the data of what we searched most. If an individual is alive in flesh and blood but all his data has been erased is he still alive or dead is a big question mark till now.


Frequently Asked Questions (FAQs)

  1. What is data Taxation or collection?
  2. Will data collection be safe for our country?
  3. Does the data collected is being used properly?
  4. Can we solve the problems in data collection?
  5. Can the data collected be used for legal purposes?



Leave a Reply

Your email address will not be published. Required fields are marked *