This app doesn’t fall into the ‘privacy-preserving contact tracing’ category (the focus of the post). It’s closer to South Korea’s, since it does track your location.
Imagine I’m arguing the point that crossword apps aren’t a privacy concern. A crossword app that tracks your location and stores it in a government database is a privacy concern, but this can’t be construed as “crossword apps are a privacy concern”.
So yeah, the Aarogya Setu implementation is absolutely a privacy concern, not just because it tracks your location, but because Modi is an evil fucker. I don’t think anyone will be surprised if he tries to use this data to help with his ethnic cleansing efforts.