ABSTRACT The paper analyses conflicts in case studies from Orissa and, in the light of the analysis, discusses the sustainibility of village institutions and their common resources. The commons in India are mainly the “assumed commons” and not commons in reality—the tenurial arrangements over such lands often lying with the Government and controlled for various purposes. These lands are used by the communities as commons under their own set of rules and regulations as long as they remain unused by the government departments concerned. This insecurity of tenure brings conflict between the government departments and the communities and raises doubts over the sustainability of both the resources and the institutions managing them. Programmes such as the Joint Forest Management, the watershed programmes etc. promote decentralisation of governance but there is still no consensus among the policy makers, the laws, the executive officers, the local communities and the users of the commons on the rights bestowed on the communities. This brings uncertainities in the implementation of these programmes. The functioning of the state governance mechanisms and those at the village level are poles apart with very little or no support extended to the village. Conflicts arise when the State retains sanctions on use but expects the communities to protect the resources. When conflicts emerge, the powers of the village institution is limited to negotiations and any sanctions imposed are outside the law. In practice all village institutions impose such sanctions. The State itself has applied funding and partial tenure mechanisms to harness local, self initiated, community initiatives in many states—especially in the Joint Forest Management programme. Far from decentralisation, this is a move more towards centralisation of control and fosters conflict between the State and the communities. Conflicts also occur within and between communities—between various users and over resource boundaries, through the heterogeneity of community structures and user interests, etc. The dominance of big village politics over smaller villages and of accessible town/trade centres over remote villages adds another level of conflict and disturbance. Lack of foresight and ‘divide and rule’ policies are responsible for the disintegration and degradation of many village institutions and their resources. Conflicts and disturbances are an integral part of the institution building process and such events bring about change. Change may include the rules and regulations or even the office bearers of the local institution. This paper tries to examine why there is a need for institutions to anticipate situations of conflict and build in rules and regulations accordingly to ensure their own sustainability. The paper concludes that: • Community based forest management systems have been and can be viable; • The situation of ‘assumed commons’ without adequate legislation providing security of tenure cannot function in the long term; • Common property regimes giving rights to defined groups over defined resources, along with executive authority to manage the resources are essential; • Principles for sustainable resource management have to be adopted and appropriate practices evolved; • Government policies must be conducive to the evolution of sustainable community-based resource management institutions. State agencies must support such institutions and respect their powers and bye-laws; • Conflicts among the disparate interested parties will occur; institutions must develop skills and flexibility to manage these conflicts and use them to promote change for the general benefit of the community and reduce threats to the commons themselves.