Experimental studies on the Lateral Geniculate Nucleus (LGN) of mammals and rodents show that the inhibitory interneurons (IN) receive around 47.1% of their afferents from the retinal spiking neurons, and constitute around 20-25% of the LGN cell population. However, there is a definite gap in knowledge about the role and impact of IN on thalamocortical dynamics in both experimental and model-based research. We use a neural mass computational model of the LGN with three neural populations viz. IN, thalamocortical relay (TCR), thalamic reticular nucleus (TRN), to study the causality of IN on LGN oscillations and state-transitions. The synaptic information transmission in the model is implemented with kinetic modeling, facilitating the linking of low-level cellular attributes with high-level population dynamics. The model is parameterized and tuned to simulate alpha (8-13 Hz) rhythm that is dominant in both Local Field Potential (LFP) of LGN and electroencephalogram (EEG) of visual cortex in an awake resting state with eyes closed. The results show that: First, the response of the TRN is suppressed in the presence of IN in the circuit; disconnecting the IN from the circuit effects a dramatic change in the model output, displaying high amplitude synchronous oscillations within the alpha band in both TCR and TRN. These observations conform to experimental reports implicating the IN as the primary inhibitory modulator of LGN dynamics in a cognitive state, and that reduced cognition is achieved by suppressing the TRN response. Second, the model validates steady state visually evoked potential response in humans corresponding to periodic input stimuli; however, when the IN is disconnected from the circuit, the output power spectra do not reflect the input frequency. This agrees with experimental reports underpinning the role of IN in efficient retino-geniculate information transmission. Third, a smooth transition from alpha to theta band is observed by progressive decrease of neurotransmitter concentrations in the synaptic clefts; however, the transition is abrupt with removal of the IN circuitry in the model. The results imply a role of IN toward maintaining homeostasis in the LGN by suppressing any instability that may arise due to anomalous synaptic attributes.