With shackled feet and closed eyes, pilgrims walk toward the tomb of Pir Imam Shah Bawa, a Sufi saint. If the shackles disentangle on their own as the devotees take their first few steps, the faithful here – Hindus and Muslims alike – believe their prayers will come true.

"Faith can move mountains," says Mohan Majhi, a resident of Pirana in India's Gujarat state. He says his chains disentangled thirteen years ago, and his prayer for a son was granted. Now, kneeling on the dusty floor of the 600-year-old syncretic shrine, Mr. Majhi is praying for peace between Hindus and Muslims who are fighting to control this religious common ground.

Eager to slough off the shrine's Muslim identity after the Gujarat riots of 2002, Hindu devotees of the saint built a barbed-wire fence between the shrine and the mosque that was originally built in the same complex. Muslims and Hindus then accused each other of stealing religious items and are now locked in a bitter court battle, each claiming the shrine is rightfully theirs.

The divisions over the shrine are a microcosm for the polarization within Gujarat, where religious segregation is expanding not only to places of worship, but also neighborhoods, schools, and workplaces. At the entrance of some villages, gaily painted message boards have sprung up since the riots that read: "Welcome to this Hindu village in the Hindu nation of Gujarat."

Expressing concern over this increasing polarization, a recent report by a high level committee from the Indian Prime Minister's office, to be tabled in the Indian Parliament in October, states that Gujarat still hasn't recuperated from the riots in which over 1,000 people, mostly Muslims, were killed. The committee noted that several Gujarati cities and towns are sharply divided into Hindu and Muslim ghettoes. Muslims, a minority in the state, face social and economic boycott from society at large. The committee also observed that dropout rates of Muslim girls have risen. And there's a dismal representation of Muslims in public-sector jobs.

"There's a state of fear and insecurity among Muslims," says a member of the committee. "The state government has done little to end the state of alienation."

Parts of Gujarat where Hindus and Muslims reside in equal numbers have been largely untouched by communalism. But for Hindu-majority areas scarred by the rioting, the divide has hardened, according to activists working for communal harmony.

Rahimanagar, a Muslim ghetto just outside the town of Anand, sprang up right after the riots. The ghetto is now home to many Muslims who are afraid to return their villages. One of them, Sattar Ghani Ibrahim, lost his transport business in the riots after all his vehicles were incinerated. Since then, without a job, Mr. Ibrahim finds it hard to feed his family of 15. "Only the H-class [Hindus] land jobs now-a-days," he says bitterly. "It isn't as easy for the M-class [Muslims]."

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