I do agree with you, that it will be an open door to many abuses. But what about Apps already existed in the Play store with same functionality as my app. Isn't this the way to remove competition from market.

There are alternatives i.e. Make user informed, 24*7 Notification about app, restrict background activity but they simply rejecting the app by showing the policy.

If someone wants to monitor anyone, why would they even need play store, They will simply create the app and install in the phone and provide all the access. Even hide the App from the screen, These are all possible without even going through Google's so called safety policy.