The parallel theological evolutions in Buddhism and mainstream Hinduism coupled with historical rivalries and interferences led to eventual assimilation of Buddhism especially in southern India.
The immigrant Indo Aryans who settled in northwestern Indian subcontinent are credited with the composition of earlier Vedas. Rigveda is known to have been composed by a set of about twelve sages of Indo-Aryan lineage. If we accept that the population of the Vedic poets is about a dozen or two, there is no meaning in the hypothesis of Indo-Aryan invasion. The small group of Indo-Aryans soon must have been absorbed into the Indian mainstream. Most of the remaining Vedas must have been composed by descendants of the Indo-Aryans and natives. This is evident by successive generations of sages of native origin.
The sage Veda-Vyasa, the highly talented and creative writer of Mahabharata and the compiler/arranger of Vedas is a shining example. Veda-Vyasa, ca.500 BC, was clearly an educated native, born to sage Parashara and Satyavathi (Matysagandhi), the daughter of Dasharaja, a boatman who used to ferry people across River Yamauna.
Veda-Vyasa is also credited with the concept and compilation of ten incarnations of Vishnu. He obviously wanted to establish the greatness of Lord Vishnu, who was a minor God during the time of Rigveda. He assembled various ten legends that existed prior in different regions of the subcontinent and welded them into a continuous collage of incarnations of the Mahavishnu.
Gautama Buddha entered the scene around the same time, with his revolutionary agnostic philosophy. Soon he was very popular and many people embraced the philosophies propagated by him. The popularity of Buddha was detrimental to the propagation of Vishnu cult. Therefore disciples of Veda-Vyasa, modified their original scheme of ten incarnations and adapted the legend of Buddha as ninth incarnation of Vishnu. This was in a way psychological rivalry of theologies and battle for supremacy. The conversion of Buddha into an incarnation was an effort to denigrate his status and supremacy.
Buddhas disciples retaliated by promoting incarnations of Buddha. Initially 24 to 28 incarnations of Buddhas were visualized. In the next stage, a number of Bodhisattas who would attain Buddha-hood in the future in future were visualized. In a way, it was an open invitation that any person can achieve Buddha-hood by following specific path laid by the Mahayana school.
One channel of mainstream Hinduism was glorifying Vishnu and other was promoting Shiva and Devi or Kali, yet another school propounded the virtues of Brahma. Buddhism tried to absorb the basic concepts of these deities into Buddhism. The Avalokiteswara, the Bodhisatta (Bodhisatva) of compassion was remoulded to embrace the virtues of Shiva. Manjusri, the Bodisatta of wisdom, was modified to represent attributes of Brahma. Padmapani was a variation of Vishnu. Similarly, parallel Dhyani Buddhas were created to represent other divine elements of the Vedic mainstream. Even the concept of a future Buddha, Maitreya, who would be born after 4000 years (shade of Kalki) was conceived.
Ajanta and Ellora (6-8 c CE) in Maharastra, Krishna valley in Andhra Pradesh, Kaveripatam and Nagapattanam in Tamilandu, Banavasi, Aihole, Mangalore in Karnataka, Ratnagiri in Orissa and Srimulavasam near Ambalapuzha in Kerala were major centres of Buddhism in southern India
Vajrayana cult of Buddhism delved into Tantric rituals like various groups of tantric Shaivite Kapalika, Siddha and Shakta cults during 7th and 8th centuries. The parallelism and collaborations amongst these groups led to dissolution of thin boundaries that separated them. Natha cult is clearly a fusion of Buddhist and mainstream Hinduism.
The Buddhism was not blatantly driven out of southern India as made out by some analysts, but was eventually absorbed into the mainstream Hinduism. Only those sects that were denied entry to Hindu temples at that time, like Thiya (Malayalee Billawas), continued to practice a weakened form of Buddhism.
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