Well, that fixes the problem. There is a sense of despair that comes from reading news about people who have no discernible motive for what they do except deliberately trying to be as stupid as possible. I have started to disbelieve in Hanlon's Razor. It's not stupidity. It's malice. In this case, very clearly malice, but I'm starting to wonder if it's malice more often than that. Oh, and most people shrugging and go…
1. The motive here is fairly straightforward -- they are trying to silence the researcher. (Edit. There is of course also the fact that they want to find the identity of the source; I don't know which of these is the primary motivation.)
2. 10 years ago or probably even 5 years ago this would have absolutely worked. The Indian government just hasn't woken up to the fact that news travels fast these days due to the Internet, and they can't control it. Indeed, the Indian media aren't even covering this. That's probably what they were counting on.
3. It is also clear to me that it is not malice. Their point of view is that if these pesky security researchers didn't go around poking flaws, then no one will find them and exploit them. Regrettably, that is a surprisingly common view. For example, many commenters right here on hacker news criticized my research on those grounds (http://news.ycombinator.com/item?id=1193417)
4. Yes, most people are going to go on with their lives. What else would you expect -- there are dozens of these minor atrocities happening around the world every day, there simply isn't enough time to do something about all of them. A good many people in India and elsewhere are doing something about this, and I believe it is making a difference. Police brutality (let alone random arrests) used to be common in India; things have gotten dramatically better in the last decade due to activism.
You often throw out these terms from philosophy/logic; that doesn't make your arguments more logical. Just an observation.