India must be breathing easier since the United States got Osama bin Laden right in the middle of Pakistan.
India and Pakistan cannot find enough proxies for their decades-old rivalry. Afghanistan is only the latest battleground. As has been obvious for many months, Pakistan was an active player behind the 2008 Mumbai terror spree, even though bilateral reconciliation talks have continued to sputter along. If not for the headline-grabbing nuclear programs in Iran and North Korea, the arms race between India and Pakistan would be at the top of the list. And so on...
India looks better when Pakistan looks bad, whether it's for harboring the planet's number-one terrorist (who also happened to be what many Indians would call a "bloodymuslim"). Pakistan will continue to receive U.S. support because Washington needs Pakistan's help in Afghanistan and around the region, and because -- even if the Pakistanis did know for five years that Osama was living a few blocks from their elite military academy -- Pakistan is in a tight spot and probably had little choice. Or they just totally missed it, which is also believable. But like anyone else, the Indians enjoy being more popular than Pakistan, even if the decline of U.S.-Pakistan intelligence cooperation adds nothing to the U.S.-India relationship.
Washington may be frustrated with Pakistan, but it is still seen as the region's U.S. outpost, and geopolitically that is also good for India, which has never stopped aspiring to leadership of the "non-aligned nations" (i.e., everyone but North America, Europe, Japan, Australia, and Israel). Even though Pakistan is being scored because for so long it was home to Osama, ironically, it's also being targeted for retaliation by Osama's own legions or by likeminded terror groups because it's also where Osama was killed. The Pakistanis may have really defied the United States (whether knowingly or not), but they'er still giving back the billion-dollar tail assembly from the Blackhawk that got left behind.
Of course, what's bad for India is the reality that Pakistan is a failing state, forced to make deals with bands of terrorists operating inside the country and around the region. India's economy is overflowing its own capacity, and it needs the kind of trade and investment that only security and stability can assure. India's politicians can rejoice, especially those in the Hindu nationalist (i.e., anti-Muslim) BJP party, but India's national interests have not been advanced.
One thing that might help India's fortunes is if Pervez Musharraf's prospects to regain the presidency of Pakistan are improved as a result of Osama-gate. Musharraf can be tough with the Indians, but he might be the man to get Pakistan back on track. And he's not afraid to engage with New Delhi.