Rushdie's 1988 novel "The Satanic Verses" is banned in India and he had been forced to cancel a plan to address the festival in person. The portrayal of the prophet Mohammad in his book incensed Muslims and led to the author spending years in hiding.

He accused authorities on Tuesday of pandering to zealots with an eye on elections where Muslims form a key voting group.

"I find an India in which religious extremists can prevent free expression of ideas at a literary festival, in which the politicians are too, let's say, in bed with those groups to wish to oppose them, for narrow electoral reasons," the British-Indian author told the Indian news channel NDTV.

"Does India want to be a totalitarian state like China?"

The question of whether Rushdie should take part dogged the festival even before it began last week as organizers tried to balance religious sensitivities with freedom of speech in the world's largest democracy.

Rushdie dropped plans to travel to the north-western city of Jaipur after assassination threats against him were reported by Indian authorities.

Organizers announced the cancellation of Rushdie's video-link on Tuesday to a mix of boos and applause after being warned by police that his appearance could trigger a riot.

"There are a large number of people averse to this video link inside this property. They have threatened violence," Ram Pratap Singh, owner of the hotel at which the festival was held, told a large crowd that had assembled to listen to the author.

"This is necessary to avoid harm to all of you."

"TRIUMPH FOR BIGOTRY"

After an announcement at midday on Tuesday that Rushdie's address would go ahead, leaders of local Muslim groups began to congregate at the main entrance to the festival, vowing to protest if the video-link was shown.

"All of us feel hurt and disgraced. Artists have not been able to prevail," said Sanjoy Roy, the festival's producer, holding back tears as he addressed the crowd on the last day of the five-day event which drew 70,000 people.

"The police commissioner told us there would be violence in the venue and a riot outside where thousands were gathering if we continued," festival director and author William Dalrymple said in a statement.

"We have all received death threats, which are still continuing to arrive."

Indian political parties have been accused of failing to support Rushdie for fear of offending Muslim voters ahead of an important state election in Uttar Pradesh, the country's most populous state, next month.

The publication of "The Satanic Verses" over 20 years ago sparked protests around the world and death threats against Rushdie after Iranian leader Ayatollah Khomeini claimed that the novel's portrayal of the prophet Mohammad insulted Islam.

Five authors have been investigated by police in Jaipur for reading from "The Satanic Verses" at the festival.

Rushdie told NTDV he felt a "fool" for having been deterred from visiting the festival. "The threat of assassination was either exaggerated or fabricated," Rushdie told NDTV.

"The threat that did exist was the threat to the festival grounds, of the sort that we've seen today. And I think for that you have to blame, obviously, the Muslim groups that were so unscrupulous, and whose idea of free speech is that they're the only ones entitled to it."

Electronic name badges, X-ray machines and police pat-downs greeted visitors to the festival and close to 600 police were stationed around the five-stage venue in the capital of Rajasthan state.

Muslims make up 13 percent of India's 1.2 billion population and there is a history of violent clashes between religious groups. Around 2,500 people, mostly Muslims, were killed in the neighboring state of Gujarat in 2002 after a suspected Muslim mob burnt alive 59 Hindu activists and pilgrims inside a train.

(Editing by John Chalmers, Raju Gopalakrishnan and Robert Woodward)

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