Margao in pre-Portuguese times was one of the important settlements in Salcete and known as Matha Grama (the village of Mathas) as it was a temple town with nine Mathas in temple schools. The Holy Spirit Church Margao was the first and only church to be built in Margao. Its replacement in 1579 was destroyed by raiders along with the seminary that had been built alongside it. The present church was built in 1675.
The initial settlement of Margao grew from the site of the ancient Damodar Temple. The original temple was demolished and the temple tank was filled up to be replaced by the Holy Spirit church and church grounds. The deity Damodar (a form of Lord Shiva) was carried across the Zuari Agranashini river to the Novas Conquistas in which the Sonde rulers resided. While the western side of the Church developed as a market place, the settlement grew on the eastern side, that is, the Borda region, with the church at its core and extended outwards.
The Holy Spirit main square is defined on one side by the church with its baroque architecture and the parochial house, and on the other side by the palatial mansions of affluent elite Catholics, positioned in a row. The Associação das Communidades building and the school being the odd exceptions which add to its character and sense of scale. They have a maximum height of two stories, and balcões and varandas facing the square. Parallel to the church square is the commercial street (old market). There is also a landscaped area next to the church called Praça da Alegria (joy square).
Margao's importance as an administrative and commercial area grew with the increasing dependence of the surrounding towns and villages; leading to the administrative centre with the town hall at its centre being built in the south. The commercial market became attached to it and was hence called maud-gao or the market town of Goa, and since then the city has grown towards the east.
In 1961, Goa was incorporated into the Indian Union, and Margao was declared as the administrative center of the district of South Goa.
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