In this paper, I have tried to test the applicability of the Quantity Theory of Money for the Indian economy in the current scenario (2001 to 2012). Using some contemporaneous estimation techniques to examine economic relationships on which the quantity theory is constructed, it is found that there is a high correlation between the Money Demand and the Price level (in Fisher’s version). However, when the Fisher’s assumptions were dropped and Friedman’s version was put into analysis with the current scenario; it was found that even then the correlation remains high between the money demand and the other independent variables. Though the main variables having a significant effect on the demand are interest rate on money and the permanent income. This proves that Friedman’s model of the QTM was a significant model. However there are certain constraints to this that will be discussed in the paper in detail.