Unexpected political turmoil marked the year culminating in the formation of the first-ever coalition government led by Dhumal after the political gamble of Virbhadra Singh to go in for early elections boomeranged and made the Congress pay a heavy price. But the Dhumal Government did succeed in settling some of the long-pending issues with Punjab and made the Centre accept its proposal to impose power generation cess. The government also issued a notification to ban the use of polythene bags from January 1, 1999.

The events that followed the Assembly elections were distinct for reasons more than one. First, the acts of physical violence before the formation of the government and then the two-week-long political impasse -- after Governor V S Rama Devi recommended imposition of President's rule in the state. Things stabilised only after the Dhumal-led coalition government was installed and subsequently the BJP won two by-elections.

It was a year of declining fortunes for Virbhadra Singh and of reverses for the Congress which suffered a major jolt. Early elections did not favour the hopeful Congress. Even Virbhadra's wife Pratibha Singh faced a humiliating defeat in the Mandi Lok Sabha by-election.

But for Dhumal, first-time entrant to the Assembly, it has been an year of phenomenal rise on the political horizan. Though his party could win only 28 Assembly seats -- one MLA Virender Kumar had died before the results -- as compared to 31 bagged by the Congress, former Union Communications Minister and supremo of the Himachal Vikas Congress Sukh Ram came forward to extend support of his four MLAs, his claim to form government having been rejected by the Governor, who preferred to call Virbhadra Singh to form government.

This, however, was not without the Raj Bhawan becoming a centre of big controversy. The Governor had earlier asked Sukh Ram to parade his MLAs because of Virbhadra Singh's claim of having the support of 34 members, including one independent Ramesh Chaudhry, a Shanta Kumar loyalist.

Virbhadra formed the government but could not stay on despite its desperate bid to muster support from outside. He resigned even before proving his majority on the floor of the House. Instead of inviting Dhumal, the Governor sent a report to the President, recommending imposition of Central rule. Democracy remained on hold for at least 11 days. Finally, the Governor's recommendation was rejected and she was asked to invite Dhumal to form governmment. By this time, Ramesh Chaudhry, a BJP rebel and Independent, had already returned to the party fold on the advice of his mentor Shanta Kumar.

Sukh Ram also was sworn in as a Minister along with three other HVC MLAs in the Dhumal Ministry, exploiting his clout the numbers gave him. However, as fate had it, he was forced to resign following the Presidential sanction to the CBI to prosecute him. But the HVC continues to support the government. The BJP later improved its strength by winning three Assembly seats in the postponed poll. It also wrested the prestigeous Mandi Lok Sabha seat from the Congress by a big margin.

But the state had to face the militants crossing over from J-K in search of peaceful habitat. The cash-strapped state, which got Rs. 300 crore from the Vajpayee Government, is still struggling to find a solution to the perennial problem. The Pak-trained militants massacred 35 innocent persons, mostly labourers, in Chamba. This was an altogether new dimension Himachal Pradesh perhaps never visualised. The threat perception in the area remains unchanged.

On the financial front, the year was significant. The state not only got special central assistance of Rs. 300 crore -- first time in its history -- but also some of the dead issues like Shah Nehar, Anandpur hydel channel, Nangal-Talwara railway line, Parwanoo-Kalka railway line and proposal for levying power generation cess, were also settled. The Chief Minister has also pleaded with the Centre to impose water cess on the power projects to add to its sagging revenues.

But worries on the financial front are far from over. Unless the Centre does the bailing-out act with a special package of Rs. 800 crore, Himachal will not be able to manage its affairs. The Dhumal administration has not been an bag of unmixed successes: he has not been able to give any new direction to the development process; the crime graph has showed an upward trend; government appointments have kicked up controversies; and there have been allegations of jobs being doled out to favouriates. These are the challenges 1998 has bequeathed to the Dhumal Governmnmet to meet in the New Year.