A comprehensive policy needs to be developed to fence in cyber fraudsters, mafia and hackers in order to isolate Indian financial markets.
Even as the RBI prepares its plans for the digital rupee launch later this year, the government and banking regulator must focus on protecting and manipulating the Indian economy from cyber fraud and safeguarding the country’s financial interests.
The improvement of economic security in the cyber world would be a prerequisite for the further opening of the currency area through digital instruments. Given the cynical innovation in cyberattacks that have been reported around the world, upgrading firewalls is the only option that will make it easier for consumers to conduct financial transactions at the same time.
In addition, the introduction of the digital currency would create new vulnerabilities against fraudsters and a possible instability that could lead to security breaches in the economy. At least 900 Indians were reportedly defrauded of more than Rs.1,200 billion in an IPO of a non-existent cryptocurrency called “ICO”. This is only the tip of the iceberg in the world of cybercrime on the economic front.
While vetoing the proposal to introduce private cryptocurrencies, those concerns and the looming economic unrest were voiced by the country’s central banker and RBI governor Shaktikanta Das.
Finance Minister Nirmala Sitharaman will do a good job in establishing a policy to safeguard India’s economic and financial interests in the cyber world. The Union budget, due to be presented on February 1st, should initiate such a political framework. Securing the financial ecosystem is particularly important as more and more transactions go online. According to data released by the National Payments Corporation of India (NPCI), over 4.56 billion transactions worth 8.27 trillion rupees (8.27 billion rupees) were processed online through the United Payments Interface (UPI) in December 2020 alone.
Similar to the consultations on cryptocurrencies led by Prime Minister Narendra Modi, the meeting of several interest groups to secure the Indian economy in cyberspace should be initiated immediately.
Cybercrime is increasing in India, according to the Indian Computer Emergency Response Team (CERT-In). By June 2021, cybercrime in Indian financial markets was a staggering 6.07 lakh. In the previous year, approximately 11.58 lakh of cybercrime were committed, while thousands of such incidents were unreported. The surge in technology fraud has been a fact, as those cases have more than doubled in two years, from 3.94 lakh in 2019.
In terms of value, transactions valued at over $ 300 billion, accounting for about 18 percent of consumer GDP in 2021, were estimated by Hong Kong-based independent capital markets and investment advisory group CLSA.
According to CLSA projections, online transactions are estimated at a whopping $ 900 to $ 1 trillion by 2025-26. That’s a huge increase when you consider that online transactions totaled about $ 61 billion, which was just over six percent of GDP in 2015-16. This can include banking, non-banking, and all financial market transactions including stocks, commodities, gold bars and real estate, etc., aside from corporate deals.
More available figures are available in the 2021 report from PwC India and the Data Security Council of India. According to the report, the value of digital payments in India is set to increase 20.2 percent annually, from about $ 64.8 billion in 2019 to $ 135.2 billion in 2023.
Given the enormous risks, India will need to establish a comprehensive political framework against cybercrime in the economic area. First, a war room may need to be established, as the Modi administration did to deal with intransigent, expansionist, and unreasonable neighbors like China and Pakistan.
The RockYou 2021 cyber attack in June last year cracked around 8.4 billion passwords, devastating economic structures and consumers worldwide. A similar attack compromised around 32 million online accounts in 2009.
This is not the first time such large-scale hacking attacks have been unleashed on humanity with the potential to ruin billions of dollars in businesses by hackers and unethical operators. One of the biggest attacks in 2017, WannaCry ransomware compromised over 200,000 computers in 150 countries and wreaked havoc on multiple industries. It cost world markets a whopping six billion pounds in just a few days.
Let’s not forget about the hacking of Yahoo servers which resulted in the compromise of 500 million accounts while no banking information was stolen. But Adobe’s 2013 cyber attack was different, with over 2.9 million credit card user information stolen and 38 million users’ personal information falling into the wrong hands.
Since every industry, every bank and every financial market operates in cyberspace, newer and innovative cybercrimes are associated with a risk running into billions. The third and fourth waves of the Covid-19 pandemic over the past two years have brought most industrial and service companies online and exposed themselves to scammers like never before.
The same is the case with governance in states and centers, where key issues were discussed in chat rooms or private online conference rooms, exposed to attacks and continuously infiltrated.
Exponential digital growth, increasing cyber attacks and strict regulatory requirements have put the Indian economy and financial markets in a spicy position.
With an economy poised to grow by double digits and half a billion people on the information superhighway, cybersecurity must be a priority to contain fraud, online mafia and hacking gangs.
(The author is a senior journalist, director and CEO of the New Delhi-based Think Tanks Center for Integrated & Holistic Studies)