I am not sure why, maybe they are just brainwashed or simply not used to having as many rights as people in the western world are accustomed to. In any case, terrorism is a real threat in India and I suspect they are all a bit touchy.
Meanwhile, the real bad guys are going to find a way around it - and will the govt of India pay me damages if my private key ended up on piratebay because someone stole it from their servers? Nope, don't think so.
Most Indian's have been brainwashed into accepting flaws/weaknesses in (big)governance, kind of like - "its a feature, not a bug"
My guess is that once tech. penetration reaches a critical mass where the rewards for breaking into a low security server outweighs the hassle for the poor or smart people, only then will the government policies be upgraded.