The two important influences on the demand for money are income and the rate of interest. There is, however, no unanimity of opinion about what constitutes money and what is the specification of the rate of interest. In a dualistic developing economy, in which money rates are generally administered, a particularly serious problem is specifying an appropriate rate of interest, This note attempts to use a concept of the rate of return hitherto not tried while examining the de-mand for money in India.