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Dharamsala has been connected with Hinduism and Buddhism for a long time, with many monasteries having been established there in the past, built by Tibetan immigrants in the 8th century, however, these monasteries are believed to have declined, with traditional Hindu building styles experiencing a revival. The local Gaddi people are now almost all Hindu, and for the most part worship many gods and goddesses, principally Durga and Shiva.
In 1848, the area was annexed by the British, and a year later, a military garrison was established in the town. Dharamsala eventually became the administrative capital of Kangra District in 1852. It became a popular hill station for the British working in or near Delhi, offering a cool respite during the hot summer months.
However, the town was virtually destroyed in a massive earthquake in 1905, which killed an estimated 20,000 people. Not only the town was devastated, but the nearby town Kangra was also ruined. After this, the British moved their summer headquarters to Shimla (also written Simla) which, though not far away, is off the main fault line and, therefore, less likely to experience a serious earthquake. Dharamsala still experiences frequent minor earthquakes.
When the Dalai Lama left Tibet, Indian Prime Minister Jawaharlal Nehru offered to permit him and his followers to establish a "government-in-exile" in Dharamsala in 1960. Since then, many Tibetan exiles have settled in the town, numbering several thousand. Most of these exiles live in Upper Dharamsala, or McLeod Ganj, where they established monasteries, temples and schools. The town is sometimes known as "Little Lhasa", after the Tibetan capital city, and has become an important tourist destination with many hotels and restaurants, creating a resurgence in tourism and commerce.
Since 2002, Dharamsala has hosted a Miss Tibet beauty contest. there. The winter capital Dharamsala has its secretariat at Sidhbari and the government would run for 2 months from there.
Dharamsala is in the Kangra valley, in the Dhauladhar mountains, and became the capital of the Kangra District in 1852. It can be accessible from Pathankot which is 120 km away. The nearest railway connection to Dharamsala is Kangra. The nearest airport is Gaggal at Kangra which is just 15km from Dharamsala . There is a daily flight from Dharamsala to Delhi.
The town is divided between McLeod Ganj or Upper Dharamsala (which retains a British colonial atmosphere), and Lower Dharamsala (the commercial centre). Upper Dharamsala (elevation about 1,700 m or 5,580 ft) is about 9 kilometers (5.6 miles) from Lower Dharmsala by road and is some 460 m (1,510 ft) higher.
McLeod Ganj, or Upper Dharamsala, is the residence of Tenzin Gyatso, the current Dalai Lama. A substantial community of Tibetan exiles resides in the town. There is a small Anglican church, St. John of the Wilderness, featuring stained-glass windows, just a few hundred metres from McLeod Ganj. Lord Elgin (Real name James Bruce), one of the british viceroys, is buried here, as is Francis Younghusband.