Looks like the complaining and protesting on Twitter helped, even if was serious, and some just memes. Somethings to note-

1. Most Indian bureaucracy is clueless about tech things, and just goes by whatever somebody who sounds like techy enough is selling them. Which in this case I'm guessing is a data mining company/lobby.

2. The information derived can be used for various purposes. Plotting election trends, economics, spotting general trends pro/against politics and other nefarious causes. etc.

3. Spying.

4. Using information to go after political opponents.

5. Demographic targeting, which in Indian context almost always means a pogrom against groups, which other groups don't like.

6. Selling data to commercial entities for better targeting, or even social engineering buying choices etc.

There could be many others. But its kind of nice that it was taken back. Having said this, it will be pushed again at some point when people are busy with a crisis and this will be sold as a fix.