The former J&K Chief Minister and leader of the Opposition People's Democratic Party (PDP) also accused the Centre of following a narrow minded approach to the problem in Kashmir, alleging it has already caused serious setback to peace process.
Sayeed said it is no good to regret the inability of the government to deny Afzal's family a "last mandatory" meeting with him or deny his body to the family.
"This he said reduces Mahatama Gandhi's country, world's largest democracy and a genuine candidate for super power status as a banana republic," he said in a statement.
Omar yesterday said it was a "tragedy" that Afzal, a resident of Sopore in Kashmir Valley, was not allowed to meet his family before he was hanged and not allowed a "final farewell."
Mufti said by the extent and scale of curbs put on normal life, Kashmir today does not look like part of Indian democracy.
He demanded immediate lifting of curfew imposed in the Valley after the hanging of Afzal on Saturday and other restrictions including information blockade.
He said the least the government could do to retrieve the situation to some extent in the aftermath of the execution of Guru would be to lift unconstitutional curbs on normal life and return his body to the family.
Mufti said it was "sad" that our democratic system could not accommodate some basic decency and legal requirements in dealing with an issue that could have very serious impact on J&K and its future.
He said the latest events have unfortunately created a sense of defeat among people who have been bruised by six-and-a-half decades of "uncertainty and bloody history."
"I wish it doesn't consume another generation of Kashmiri youth but one cannot wish away the apprehension" Mufti said.
Jammu: PDP patron Mufti Muhammad Sayeed on Monday called India a "banana republic" over Afzal Guru's family not being allowed to meet the Parliament attack convict before he was hanged, a day after Jammu and Kashmir Chief Minister Omar Abdullah said this was a "tragedy".
First Published: Monday, February 11, 2013, 22:13