Thakur, who will be sworn in on Wednesday, will be the 14th Chief Minister of Himachal Pradesh.
However his new government would not allow to further burden the state economy. Thakur's name was proposed by Suresh Bharadwaj and Mahender Singh and seconded by other members.
The chief minister had created major rift within the BJP state unit with supporters of both Mr Thakur and Mr Dhumal clashing outside the venue of a meeting of central observers in Shimla.
After his name was officially announced as the next CM of the hill state, the chief minister-elect along with the party's central observers and other leaders met governor Acharya Dev Vrat to stake claim for government formation.
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Union minister J P Nadda was also said to have been in the running for the top office but sources said his name was just a red herring to keep Dhumal on the defensive.
Shimla: The BJP has succeeded in elbowing out veteran leader Prem Kumar Dhumal from the race for chief ministership.
Hailing from a humble background, Thakur was born into an agricultural family in Mandi district in 1965.
Thakur is a graduate from Government College, Mandi. The BJP won nine of the 10 seats in Mandi this time.
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Mr Thakur said apart from PM Narendra Modi and Amit Shah, chief ministers of many BJP-ruled states will attend the swearing-in ceremony. He did his post-graduation from Panjab University in Chandigarh and made a decision to join politics when he was in his 20s.
At 28 years of age, he contested the 1993 Assembly polls from Seraj on a BJP ticket and lost.
The BJP ousted the Congress from power by winning 44 of the 68 seats in fray.
A soft-spoken man, Thakur's strength is that he is seen as a leader who has managed to straddle the BJP's warring factions in Himachal Pradesh.
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The BJP took nearly a week to decide on the Chief Minister after its chief ministerial candidate Dhumal lost the election.