Poor Indians trying to get benefits but having those benefits taken is a life threatening crisis for those impoverished individuals and families. It is entirely forgivable for those families to ignore the "long term consequences" when the short term consequence is losing the meager benefits they have to corruption. Your argument is like arguing that chemotherapy will ruin your body when the patient is dying of cancer.

If their system can stamp out widespread corruption in exchange for some loss of privacy, the cure is not worse than the disease. The technically minded in wealthy countries should consider helping by proposing a better solution, rather than criticizing measures borne from true desperation.