"Through legal means they (USA) are scooping and dredging up huge amounts of information.
"(They are) only looking at bad guys who are communicating with each other, but you can retrieve it (the information) many years later for blackmail or whatever you want," Singh said at 'The Hackers Conference', a meet organised in the city to discuss cyber security solutions.
He was referring to recent revelations of data mining by the US government by whistleblower Edward Snowden.
"Somebody in this room becomes prime minister of India 20 years from now. They will go into your background and scoop it up to see what were you doing, what were the mails you were exchanging.
More From This Section
"That becomes the very instrument (for) blackmailing future leaders of any country," Singh said.
Singh stressed on the need for international cooperation on matters of cyber security but noted that there are no international laws in this space which are binding on countries.
But ideological difference and involvement of military in cyberspace is foiling international cooperation in the area, he added.
Meanwhile, Sri Lankan High Commissioner to India, Prasad Kariyawasam, one of the speakers at the event, said there was an urgent need to focus on developing regional capability in cyberspace before competing as part of the global economy.
"We have to catch up with the world, but before that challenges of cyber world must be handled properly.