The indigenous people of Dharan are Limbu and Rai collectively known as Kiranti. Dharan started as a small trading settlement of Chaubis or Miklung Kingdom of Limbuwan (one of the ten Kingdoms of Limbuwan). Over the last couple of decades, the population of Dharan has increased and diversified to include people from various ethnicity like Gurungs, Newar, Brahmins, Chhetris etc.
The modern Dharan's foundation was laid in 1902 A.D. by prime minister Chandra Samsher. He established a small village at the foot of Vijayapur hillock and named it Chandranagar (now Purano Bajar). The purpose was to supply timber to East India Company, who in 1890's had expanded it's North Eastern territory and was laying railway tracks. The first government official to be appointed in this small village of Chandranagar was Subba Ratna Prasad. A settlement grew steadily over the course of time. This growing settlement was named Juddha Nagar (now Naya Bazaar) after Prime minister Juddha Samsher. In 1960 Dharan was recognized as a 'municipal town'.
This transformation of Dharan was triggered by the establishment of the British Gurkha (GORKHA) recruitment center in 1953. Recruits from all over Nepal flocked to join British Gurkha thereby drastically altering the face of Dharan. There was a surge in population with recruits bringing their families, and others who came to seek employment and exploit business opportunities. As a result, Dharan has emerged as one of the biggest town in eastern Nepal. It is in true sense a melting pot of different ethnic groups, languages, dialects and religions.
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