What is less clear is the correct interpretation of what happened. Mr Modi's supporters, and even some who don't support him, have cried foul. Notably, Wall Street Journal columnist Sadanand Dhume, explaining why he withdrew from the conference, called the decision "the intellectual equivalent of an eviction notice".
That it's impolite to first invite, and then un-invite, someone should be conceded. So far, fair enough.
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The problem arises when it's next claimed that cancelling Mr Modi's invitation represents a violation of "free speech" or "freedom of expression". Mr Dhume claims the university opted to "toss aside the principles of free speech and reasoned debate".
But is this really true? Or is free speech rather a red herring in this debate?
The right to free speech, and free expression more generally, is protected by the US Constitution and constitutions elsewhere in the world.
This is where the confusion (or obfuscation) begins. For the right to speak freely implies no corresponding obligation for someone else to give you a platform to exercise that freedom. The First Amendment of the US Constitution - and Article 19 of the Indian Constitution - prohibit government censorship of expression.
But neither constitution prohibits a student body or indeed a university from deciding who it wants to invite, or un-invite. Indeed, un-inviting and "rudeness" in general, though a violation of the rules of etiquette, is also a constitutional exercise of free speech - not its abrogation.
Ania Loomba, a professor of English literature who helped lead the campaign against Mr Modi's participation in the Wharton event, makes a similar point persuasively in an interview to the New York Times' India blog. Objecting to an invitation to Mr Modi isn't tantamount to depriving him of free speech; on the contrary, in itself represents an exercise of free speech by his critics.
Further, had the organisers stuck to their guns and the invitation to Mr Modi stood, then those who opposed it would, presumably, have protested peacefully or merely boycotted the event. This, again, is a perfectly legitimate expression of freedom of expression, not its contrary.
So the Wharton affair isn't at all comparable to, say, the cancellation of Salman Rushdie's appearance at last year's Jaipur Literature Festival due to the presumed threat of violence from mobs gathering outside the venue. There is a world of difference between boycotts and peaceful protest on the one hand and thuggery and the threat of violence on the other. When mobs intimidate those with unpopular views and governments fail to guarantee individual freedom, it is threats of violence they are failing to address. No such threat was present or implied in this case.
While "free speech" is, thus, a red herring in the debate, could one take a different tack, and argue that the university has done disservice to its liberal ethos and the values of free debate and discourse that it presumably cherishes? Ashutosh Varshney, a distinguished scholar and outspoken critic of Mr Modi, believes as much. Mr Varshney suggested that the right model was how Columbia University handled a controversial visit to campus by Iranian President Mahmoud Ahmadinejad a few years ago: "critique if you disagree, but don't disinvite". On that occasion, despite pressure to cancel the visit, the university allowed it to go ahead, but President Lee Bollinger put Mr Ahmadinejad on the mat and made remarks critical of his guest in his presence and in a public forum.
One could debate how successful the Columbia compromise was. After all, if it's bad manners to un-invite you, isn't it equally poor grace to invite you and then humiliate you in front of other people? You might just wish you'd been un-invited instead.
More substantively, it would be difficult to sustain the view that there is only one correct way to respond to such a situation. Universities must weigh the benefits to the campus community of engaging with an interlocutor, perhaps one that is disliked by many, against the costs of so doing. In this case, allowing a keynote address on economic development by Mr Modi would involve legitimising, with honour and endorsement, a controversial and polarising figure.
You could certainly question the manners of whoever ultimately took the decision to un-invite Mr Modi - whether the organisers or the university administration is unclear from the public record - but to suggest that this represents a fundamental failure of liberalism itself is quite a stretch.
The dilemma of how universities - to say nothing of governments - in the US and elsewhere should deal with Mr Modi isn't going to disappear anytime soon. If he does, in fact, become Prime Minister of India, will the "Ahmadinejad solution" be applied? Or will he be shunned, as was Austrian President Kurt Waldheim when his Nazi past became known? Either way, in the hurly burly of contested ideas, the right to change one's mind, the right to condemn, and the right to be impolite remain a vital part of constitutional and academic free speech.
Dehejia is an economics professor at Carleton University in Ottawa, Canada, and co-author of Indianomix: Making Sense of Modern India. Nundy is an advocate at the Supreme Court of India and a legal policy adviser to various governments and the United Nations