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While there is a detailed mythological story behind the day, it is essentially to celebrate the victory of good over evil. Its been described as a day when people forgive their enemies and meet them with love. Throwing colors on people is used as a gesture of love and friendship. image source
I've heard it's a pretty crazy scene, and can get pretty rowdy...On a more practical side, the spring season, during which the weather changes, is believed to cause viral fever and cold. Therefore, the playful throwing of the colored powders has a medicinal significance: the colors were traditionally mixed with medicinal herbs prescribed by Ayurvedic doctors. (source)
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But over the years, these colors have been replaced by cheaper, industrial dyes. There's been a big campaign to encourage people to use natural homemade dyes instead, as the industrial varieties contain toxic substances. Yikes!I would love to see this in person someday. Anyone ever been?