The withdrawal happened after a group of faculty at Penn wrote a letter to the president of the University, objecting to Modi's participation. The full text of that letter can be found here. Today there is also a clarifying interview with one of the faculty involved, Ania Loomba, at the New York Times' India Ink blog. Needless to say, there has been widely covered within India -- see stories at the Hindustan Times and Deccan Chronicle for starters.
As Ania Loomba herself points out in the interview at the New York Times I linked to, doing this keynote at Wharton was clearly intended to serve as part of the rehabilitation of Narendra Modi's image in the West. This rehabilitation is important to Modi as he is thinking of leading the BJP and competing for the Prime Ministership in next year's nationwide elections.
Many Indians have questioned Penn/Wharton's decision to withdraw its invitation to Modi, with "freedom of speech" cited in several columns and blog posts I've come across in the past couple of days. The Wall Street Journalist columnist Sadanand Dhume criticized the move, for instance (though his column on this appears to be paywalled and I cannot access it or link to it at present), as did the ostensibly liberal writer and politician Shashi Tharoor (see here).
Let's look at this a little bit more. First of all, here's what Ania Loomba says about the freedom of speech issue in response to a question from the Times' India Ink reporter:
Q: [NYT] In 2007, Columbia University invited President Mahmoud Ahmadinejad of Iran, a highly controversial international figure, to address its students, amid protests by a host of groups. In a culture that embraces free speech, some have asked, should Mr. Modi’s address have been boycotted?
[Loomba] It is part of a vibrant democracy to dissent and indeed to boycott speakers. Our letter to the student organizers of the Forum simply expressed our objections to their invitation. There is a big difference between shutting down free speech and raising principled objections to inviting a man with a sordid human rights record.
Let us be clear: we are not opposing his right to free speech. He has those rights, and avails of them on a daily basis: he has full and immediate access to the news media in Gujarat and India. What we are opposed to is the Forum, which is an element in a larger institution of which we are a part, granting him a position of honor to increase his personal legitimacy, and thus further a political agenda which we find reprehensible.
Finally, the media has been presenting it as a few professors shutting the desires of students. But many students were signatories too. As well as doctors, lawyers and concerned citizens. We did not speak from a position of any authority because student groups at Penn have the right to invite anyone they want. And, of course, anyone has the right to raise objections to that. Why did the organizers change their mind? Was it only because of us? According to the organizers, there were several “stakeholders” whose opinions influenced their views, including members of the alumni. (link)
To that effect I believe I have a slightly different approach to the freedom of speech question than does Ania Loomba in this instance.