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Rajnath is a political appointment. You need to understand that he is not PM Modi's first choice; he's there because Rajnath was the one who elevated NaMo to the PM candidate position. If Rajnath has to step down, there has to be some major gaffe done by him that makes the public angry.I doubt LCH is even on Modi's radar (ignore the pun), nor is it really appropriate for him to do such interventions. I have to ask where the defence minister is in all this, his job should be to boost Indian defence industry but he seems to be MIA 99% of the time, you don't even see quotes from him in the media or any indication he pays attention to any of these matters.
If Modi pushes Rajnath down on his own, Rajnath will take his entire political base and become a thorn within BJP. He will also make it difficult for Yogi to become a strong face in the UP as he has more experience than either of them in that state. Rajnath in adversarial role would try then to contest for UP elections as UP CM.
The PM does not want people who stay inside and become the enemy soon. So he will avoid removing Kadi Ninda Singh from RMO. There is only one non-controversial way to do it without creating enemies inside - take MoD under the PMO under Modi.
But then he will need to put Rajnath in another key ministry.
I'd rather have the MoD directly under the PM as it was under Indira Gandhi during the late 60s/70s.