Security was tightened in the city and although the hardline Hindu organisation Vishwa Hindu Parishad (VHP) called for the anniversary to be observed as a "day of valour", no incidents of violence have been reported.
"We have urged the youths to take a firm resolve for construction of a Ram temple in Ayodhya" , state VHP joint general secretary De Jaideep Patel said in Ahmedabad, a Hindu newspaper reported.
The mosque was razed in 1993 by Hindu zealots who claimed it was the birthplace of their god, Ram. More than 2000 people died in clashes across India as a result of the mosque's destruction.
Muslims observed the day as Kheraz-e-Akidat (day of mourning), responding to a call from the Babri Masjid Action Committee to shut all businesses as a mark of protest against the demolition of the mosque.
Parliament let off
Meanwhile, India's ruling Hindu nationalists on Saturday escaped annual accusations they tore down the mosque, as parliament was out of session.
The day marking the demolition this year fell on a Saturday, meaning opposition parties could not carry out their ritual stalling of parliament until the speaker allows debate on the issue, AFP reports.
Members of a Muslim group with bound
hands at a New Delhi demonstration
The opposition clamoured on Friday to force a debate in parliament on whether senior leaders were behind the razing of the mosque.
But this time Speaker Manohar Joshi refused to allow the discussion, leading opposition MPs to walk out.
A special court in September rejected filing charges against Deputy Prime Minister Lal Krishna Advani for allegedly inciting the mob to tear down the Babri mosque but charged seven other senior right-wing Hindus.
Since taking power in 1998, Advani's Bharatiya Janata Party (BJP) has played down its support for building a temple over the ruins of the mosque.
"We have always said that the dispute can be resolved either through dialogue or a court verdict," BJP spokesman Vijay Kumar Malhotra said.
The BJP last week swept the main opposition Congress out of power in three states after an election fought mostly on development issues.