With security tight at flash points around the country, Prime Minister Atal Behari Vajpayee accused Pakistan's military ruler of wrecking peace hopes by harping on Kashmir when the two men met for summit talks last month.
"We believe in friendship of the people of the two countries and all-round relations, but Pervez Musharraf was not interested in this," Vajpayee said.
"He came with a one-point agenda of Kashmir and he wanted to call terrorists 'freedom fighters'. All this was not acceptable to us.
"Pakistan couldn't take Kashmir through wars. There should be no illusion that it could get it through supporting terrorism," said the prime minister, speaking from behind a bullet-proof glass screen on the soaring ramparts of the 17th-century Red Fort in the Indian capital as the country marked its 55th Independence Day.
The two countries were born at midnight, Aug. 15, 1947, when the former British colony was partitioned into mostly Hindu India and Muslim-dominated Pakistan.
The two South Asian nuclear rivals have fought two of their three wars since independence for control of Kashmir. India controls two-thirds of the Himalayan territory and Pakistan the remainder. Both claim Kashmir in its entirety.
The two neighbors spend billions of dollars on defense every year even as millions of people go hungry. More than 40 percent of their population remain illiterate and both governments concede there isn't enough money for education.
Both nations acknowledge that peace can bring prosperity to their combined population of more than 1.15 billion. Yet they haven't been able to put aside their animosity, which arose with partition of British-ruled India into independent India and Pakistan.
Mohandas Gandhi, the man who led a nonviolent struggle spanning over half a century to free India from colonial rule, gave his life protesting partition. He was killed by a Hindu nationalist who considered Gandhi too soft on Pakistan.
The July 15-16 summit in the Indian city of Agra the first between the nuclear-capable neighbors in more than two years ended without even a joint declaration.
Islamabad denies sponsoring the 12-year-old insurgency against Indian rule in Jammu and Kashmir, saying it provides only moral and diplomatic support to an indigenous struggle for self-determination.
Wednesday, the bloodshed continued.
Separatist guerrillas killed seven people, including five Hindus, in Muslim-majority Jammu and Kashmir state where violence has surged since the summit.
A grenade explosion in Indian Kashmir's Kupwara district on the border with Pakistan wounded 18 people, including some children, just as they ended an independence day function. The Pakistan-based Lashkar-e-Taiba claimed responsibility.
A land mine went of later in the remote Doda region wounding seven policemen on patrol duty. A district commissioner narrowly escaped another land mine that exploded in Anantnag district.
Indian forces killed three rebels in a gunbattle in the Poonch region, some 155 miles north of Jammu, winter capital of the state.
Srinagar, Kashmir's main city, was deserted but for the troops who patrolled the streets after the region's main separatist alliance called for a strike.
Indian authorities tightened security around New Delhi, Kashmir and the insurgency-racked northeastern corner of the country to stave off the customary Independence Day attacks by guerrillas, who had as usual called for a boycott of the festivities.
About 100,000 police and paramilitary soldiers took positions at key points in the capital. They frisked thousands of people who gathered to listen to the speech and checked vehicles passing through the area.
Watched by millions on a live television broadcast, Vajpayee unfurled a petal-filled Indian tricolor at the fort, where until 1947 the Union Jack had proclaimed a British dominion.
Pakistan celebrated its independence anniversary on Tuesday.
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