Now, comes the exposition of Indian view of the Avatarhood:
"All existence is a manifestation of God because He is the only existence and nothing can be except as either a real figuring or else a figment of that one reality. Therefore every conscious being is in some part or in some way a descent of the Infinite into the apparent finiteness of name and form. But it is a veiled manifestation and there is a gradation between the supreme being of the Divine and the consciousness shrouded partly or wholly by ignorance of self in the finite. The conscious embodied soul is the spark of the divine Fire and that soul in man opens out to self-knowledge as it develops out of ignorance of self into self-being. The Divine also..."
This is the second formation.
"The Divine also, pouring itself into the forms of the cosmic existence, is revealed ordinarily in an efflorescence of its powers, in energies and magnitudes of its knowledge, love, joy, developed force of being(vibhuti), in degrees and faces of its divinity..."
Now comes the third.
"But when the divine Consciousness and Power, taking upon itself the human form and the human mode of action, possesses it not only by powers and magnitudes (like vibhutis), by degrees and outward faces of itself but out of its eternal self-knowledge, when the Unborn knows itself and acts in the frame of the mental being and the appearance of birth, that is the height of the conditioned manifestation; it is the full and conscious descent of the Godhead, it is the Avatara.
“The Vaishnava form of Vedantism which has laid most stress upon this conception expresses the relation of God in man to man in God by the double figure of Nara-Narayana, associated historically with the origin of a religious school very similar in its doctrines to the teaching of the Gita. Nara is the human soul which, eternal companion of the Divine, finds itself only when it awakens to that companionship and begins, as the Gita would say, to live in God. Narayana is the divine Soul always present in our humanity, the secret guide, friend and helper of the human being, the "Lord who abides within the heart of creatures" of the Gita; when within us the veil of that secret sanctuary is withdrawn and man speaks face to face with God, hears the divine voice, receives the divine light, acts in the divine power, then becomes possible the supreme uplifting of the embodied human conscious being into the unborn and eternal. He becomes capable of that dwelling in God and giving up of his whole consciousness into the Divine which the Gita upholds as the best or highest secret of things, uttamam rahasyam. When this eternal divine Consciousness always present in every human being, this God in man, takes possession partly or wholly of the human consciousness and becomes in visible human shape the guide, teacher, leader of the world, not as those who living in their humanity yet feel something of the power or light or love of the divine Gnosis informing and conducting them, but out of that divine Gnosis itself, direct from its central force and plenitude, then we have the manifest Avatar. The inner Divinity is the eternal Avatar in man; the human manifestation is its sign and development in the external world.
“When we thus understand the conception of Avatarhood, we see that whether for the fundamental teaching of the Gita, our present subject, or for spiritual life generally the external aspect has only a secondary importance. Such controversies as the one that has raged in Europe over the historicity of Christ, would seem to a spiritually-minded Indian largely a waste of time; he would concede to it a considerable historical, but hardly any religious importance; for what does it matter in the end whether a Jesus son of the carpenter Joseph was actually born in Nazareth or Bethlehem, lived and taught and was done to death on a real or trumped-up charge of sedition, so long as we can know by spiritual experience the inner Christ, live uplifted in the light of his teaching and escape from the yoke of the natural Law by that atonement of man with God of which the crucifixion is the symbol? If the Christ, God made man, lives within our spiritual being, it would seem to matter little whether or not a son of Mary physically lived and suffered and died in Judea. So too the Krishna who matters to us is the eternal incarnation of the Divine and not the historical teacher and leader of men.
“In seeking the kernel of the thought of the Gita we need, therefore, only concern ourselves with the spiritual significance of the human-divine Krishna of the Mahabharata who is presented to us as the teacher of Arjuna on the battlefield of Kurukshetra. The historical Krishna, no doubt, existed. We meet the name first in the Chhandogya Upanishad where all we can gather about him is that he was well known in spiritual tradition as a knower of the Brahman, so well known indeed in his personality and the circumstances of his life that it was sufficient to refer to him by the name of his mother as Krishna son of Devaki for all to understand who was meant. In the same Upanishad we find mention of King Dhritarashtra son of Vichitravirya, and since the tradition associated the two together so closely that they are both of them leading personages in the action of the Mahabharata, we may fairly conclude that they were actually contemporaries and that the epic is to a great extent dealing with historical characters and in the war of Kurukshetra with a historical occurrence imprinted firmly on the memory of the race. We know too that Krishna and Arjuna were the object of religious worship in the pre-Christian centuries; and there is some reason to suppose that they were so in connection with a religious and philosophical tradition from which the Gita may have gathered many of its elements and even the foundation of its synthesis of knowledge, devotion and works, and perhaps also that the human Krishna was the founder, restorer or at the least one of the early teachers of this school. The Gita may well in spite of its later form represent the outcome in Indian thought of the teaching of Krishna and the connection of that teaching with the historical Krishna, with Arjuna and with the war of Kurukshetra may be something more than a dramatic fiction. In the Mahabharata Krishna is represented both as the historical character and the Avatar; his worship and Avatarhood must therefore have been well established by the time – apparently from the fifth to the first centuries B.C. – when the old story and poem or epic tradition of the Bharatas took its present form. There is a hint also in the poem of the story or legend of the Avatar's early life in Vrindavan which, as developed by the Puranas into an intense and powerful spiritual symbol, has exercised so profound an influence on the religious mind of India. We have also in the Harivansha an account of the life of Krishna, very evidently full of legends, which perhaps formed the basis of the Puranic accounts."