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This study of decentralised institutions for forest management brings out the varied dimensions of local institutions and politics as they interface with property rights and decentralisation. Unlike the economic literature on decentralisation that is dominated by normative and prescriptive arguments on how a shift towards decentralisation should take place, this paper makes a case for re-centering of the political in the decentralisation literature. This political study of decentralisation does not prescribe decentralisation rules, but weighs the different social, economic and ecological outcomes under varied local conditions. It takes note of the diversity of local institutions and politics in the interpretation of formal rules, power relations, legal rights, moral claims, social custom, and the establishment of informal institutional arrangements. This is done in the context of questioning the typologies of neat property regimes that are broadly categorised as — open-access, state, private and common property - in the economic literature. These widely accepted typologies are tested at the local level and it is found that ownership does not necessarily refer to control and use of resources. The paper highlights the heterogeneity of property regimes under which the village communities manage the forests, and points out that specific state-society relations in particular villages determine the entitlements of the villagers. Importantly, the nature of collective action on decentralisation and negotiation of institutional design has an impact on the consequences at the local level. As the local reality is based on varied local resources, institutions, political processes and social capital, uniform national or state policies have very different local outcomes. This paper asks if it is possible to evolve policies that incorporate diverse institutional arrangements with a combination of different kinds of property rights under decentralised local governance management.