AbstractJoint Forest Management (JFM) in India provides local communities with forest usufructs such as fuelwood, fodder, non‐timber forest produce and a share in the final timber harvest in lieu of their forest protection and regeneration activities. Such usufructs, alone, are unlikely to sustain interest in the JFM programme. Instead, village resource development activities may provide a potent mechanism for reducing dependence on forests, for enhancing participation in the JFM programme and for leading to improvements in people's livelihood status. Through case studies on the experiences with village development in the Indian state of Madhya Pradesh, this paper attempts to make a case for using JFM as a medium for localized development and for diversifying and encouraging fund sources for this purpose, particularly village common funds. Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment.