"A classification system used to categorise humans into distinct populations or groups by anatomical, cultural, ethnic, genetic, geographical, historical, linguistic, religious, and/or social affiliation.”
Racism can be defined as:
“The belief that all members of each race possess characteristics, abilities, or qualities specific to that race, especially so as to distinguish it as inferior or superior to another race or races.”
When a group of people are labeled according to a certain religious belief or affiliation and their access to public services, jobs, livelihoods and social freedoms are denied or restricted on the basis of this belief or affiliation this is racism.
Leaving aside the various arguments in favour or against the practice of Dorje Shugden the issue of government sanctioned racism and discrimination comes more sharply into focus.
Let's take as a basis the following facts:
Dorje Shugden practice was allowed in Tibetan monasteries prior to 1996.
Dorje Shugden practitioners were allowed to participate in the Tibetan Government in Exile and the CTA prior to 1996.
Dorje Shugden practitioners were just a normal part of society prior to 1996, they weren't subject to state surveillance and their fellow citizens weren't asked to report on them.
In June 1996 the Tibetan Government in Exile's Parliament passed a resolution stating that everyone in all departments and branches of the government as well as all of the monasteries under the administrative control of the government, “should be strictly instructed, in accordance with the rules and regulations, not to indulge in the propitiation of Shugden.”
On 17th September 1997 the Parliament passed a further resolution stating that, “Particularly in the Three Great Monastic Universities of Sera, Gaden and Drepung, the restriction on Shugden practice should be kept up” It went on to state that, “Efforts should be made to ensure that Shugden practitioners do not receive tantric teachings.”
The same 1997 resolution called for Tibetans to inform on their fellow citizens who continued to practice Dorje Shugden: “People should send as much report as possible so that the local government and concerned central government departments of India are kept informed of the activities of Shugden supporters.”
So prior to 1996 the practice of Dorje Shugden was a matter that would not explicitly affect an individuals standing in the community of Tibetans in exile in general.
Following 1996 it then became a significant issue which would exclude you from working for any part of the government or studying tantric teachings in any of the government monasteries. It would also make you an object of state surveillance and your fellow citizens would report to the CTA on your activities.