International Journal of Social Science & Interdisciplinary Research__________________________________ ISSN 2277-3630 IJSSIR, Vol. 4 (4), APRIL (2015), pp. 180-192 Online available at indianresearchjournals.com NEUTRALITY OF MONEY IN INDIA: A MYTH OR A REALITY ARCHI BHATIA RESEARCH SCHOLAR, DEPARTMENT OF ECONOMICS AND PUBLIC POLICY, CENTRAL UNIVERSITY OF HIMACHAL PRADESH, HIMACHAL PRADESH. ABSTRACT The paper aims to study the causal relation between money supply, output, general price level and interest rate for India. The nature of the causal link has serious implications for the effectiveness of monetary policy and the monetary policy rule itself (which instrument should be used to achieve stabilization of output around natural rate and inflation around zero). To investigate the issue of neutrality of money in the context of Indian economy post liberalization, four variable vector autoregressive models is developed. 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