Mukherjee, the first Indian President to visit Nepal in 18 years, wore traditional headgear while visiting the Janaki temple where he offered prayers on the third and last leg of his three-day State Visit to Nepal.
He was welcomed by priest reciting 'Swasti vachan', a kind of traditional Sanskrit prayer for welcoming guest.
"I am happy to announce, during my State Visit to Nepal, that government of India will construct 2 Dharmashalas along the 'parikarma path' of Janakpur Dham to facilitate visiting this ancient city," the President said.
Describing his visit to Janakpur city as "memorable", Mukherjee said this important pilgrimage destination is one of the most significant focal points of the cultural and spiritual linkages between India and Nepal.
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"I thank the Janaki mandir authorities and the people of Janakpur for receiving me today. I am deeply touched by their warm affection. I offer them greetings on the festival of Chhath from the government and the people of India and best wishes for their progress and prosperity," he added.
The temple built in 1910 by Queen of Tikamgarh is in the centre of Janakpur which is said to be once ruled by King Janak.
Built in bright white, the temple is constructed in a mixed style of Islamic and Rajput domes. The temple is a three storied structure made entirely of stone and marble.
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The President said India-Nepal relations are founded on the two countries' ancient linkages and traditions.
Mukherjee added that the key to economic development of Janakpur lies in the promotion of the tourism sector.
"Recently, Janakpur and Ayodhya reinforced their ancient ties by signing a twin city agreement. The development of Ramayana tourism circuit, with better facilities for millions of pilgrims, will not only generate employment opportunities but also strengthen the story of our common heritage," he said.
"It is essential that we pay adequate attention to the development of border infrastructure and connectivity to facilitate movement of people. Today, in consonance with priorities of the people of Nepal, both governments are giving particular attention to expediting implementation of connectivity and developmental projects such as terai roads, cross border rail links integrated check posts, power and transmission lines," the President said.
These projects, he said, are vital not only for Nepal's socio-economic and infrastructural transformation but also demonstrate our "collaborative efforts to facilitate trade, investments and movement of people."