Final answer:
India is the country mentioned by Rushdie that is a member of the Commonwealth but its literature is not considered "Commonwealth literature" due to its unique cultural references, magic, and myth.
Step-by-step explanation:
The country mentioned by Rushdie that is a member of the Commonwealth, but its literature is not considered "Commonwealth literature" is India.
Although India is a member of the Commonwealth, its literature is often considered distinct from the concept of Commonwealth literature. This is because Indian literature has a rich cultural and historical background that sets it apart from other Commonwealth countries.
For example, Rushdie's novel Midnight's Children incorporates Indian cultural references, magic, and myth, which are unique to Indian literature.