The current study makes an attempt to study casual relationship between FIIs inflows and economic growth in India. The study covers the period from 1996 to 2009. The present study is based on quarterly data of Net FII inflows and GDP of India. The empirical relationship between FII inflows and economic growth has been examined using Engle- Granger Cointegration test, Granger Causality test and VAR modal. The results of the study have provided no support for the hypothesis that FII inflows have the potential of influencing the process of economic growth in India. Further, the results of the study have also revealed that economic growth is not a significant determinant of FII inflows in India. Hence, it makes clear that FII inflows in India are not attracted by macro economy development in India Thus, it can be concluded from the study that wealth created in Indian stock market with the help of FII inflows not increases real wealth of the country