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Get access to the detailed solutions to the previous year's questions asked in XAT exam.
The passage says that Mr Loyal has significant followers within the party and any severe action against Mr Loyal will adversely affect the NPP.
Among the options, C would cause the most damage to the NPP as it could lead to a split in the party or may even lead to many followers of Mr Loyal leaving the party.
A and E will not cause much damage to the party.
Options B and D will create some animosity between Mr Loyal and NPP, but not as much as expelling Mr Loyal.
Hence, the answer is option C.