Economics Optional Syllabus for UPSC: The Ultimate Preparation Guide

Economics is one of the optional subjects offered by the UPSC. The emphasis of the Economics curriculum for the UPSC IAS Exam is on the student’s comprehension of fundamental ideas and utilization of ideas to problems in infrastructural planning and environmentally sound progress.

The Economics optional syllabus for UPSC overlaps around 50-60% of the General Studies paper III Syllabus of the UPSC Mains exam.

This article is the ultimate guide for you if you are looking for Economics optional syllabus for UPSC.

Economics optional syllabus for UPSC (Paper I)

Advanced Micro Economics :

1. Marshallian and Walrasian Approaches to Price determination.
2. Alternative Distribution Theories: Ricardo, Kaldor, Kalecki.
3. Markets Structure: Monopolistic Competition, Duopoly, Oligopoly.
4. Modern Welfare Criteria: Pareto Hicks and Scitovsky, Arrow’s Impossibility Theorem, A. K. Sen’s
5. Social Welfare Function.

Advance Macro Economics :

Approaches to Employment Income and Interest Rate determination:

1. Classical,
2. Keynes (IS-LM) curve,
3. Neo-classical synthesis and New classical,
4. Theories of Interest Rate determination and Interest Rate Structure.

Money – Banking and Finance :

1. Demand for and Supply of Money:
   • Money Multiplier Quantity Theory of Money (Fisher, Pigou and Friedman) and Keynes’ Theory on Demand for Money,
   • Goals and Instruments of Monetary Management in Closed and Open Economies
   • Relation between the Central Bank and the Treasury.
   • Proposal for ceiling on growth rate of money.
2. Public Finance and its Role in market economy:
   • in stabilization of supply, allocation of resources and in distribution and development.
   • Sources of Government revenue, forms of Taxes and Subsidies, their incidence and effects.
   • Limits to taxation, loans, crowding-out effects and limits to borrowings.
   • Public expenditure and its effects.

Related Reading: How to prepare Economics for UPSC: A Comprehensive Guide

International Economics :

1. Old and New Theories of International Trade.
   • Comparative advantage,
   • Terms of Trade and offer curve.
   • Product cycle and Strategic trade theories.
   • Trade as an engine of growth and theories of underdevelopment in an open economy.
2. Forms of protection: Tariff and quota.
3. Balance of Payments Adjustments: Alternative Approaches.
   • Price versus income, income adjustments under fixed exchange rates.
   • Theories of Policy mix.
   • Exchange rate adjustments under capital mobility.
   • Floating Rates and their implications for developing Countries: Currency Boards.
   • Trade Policy and Developing Countries.
   • BOP, adjustments and Policy Coordination in open economy macro-model.
   • Speculative attacks.
   • Trade Blocks and Monetary Unions.
   • WTO: Trims, TRIPS, Domestic Measures, Different Rounds of WTO talks.

Growth and Development:

1. Topics related to:
   • Theories of growth: Harrod’s model;
   • Lewis’s model of development with surplus labour.
   • Balanced Unbalanced Growth.
   • Human capitals and Economic Growth.
   • Research and Development and Economic Growth.
2. Process of Economic Development of less developed countries:
   • Myrdal and Kuznets on economic development and structural change
   • Role of Agriculture in Economic Development of less developed countries.
3. Economic Development and International Trade and Investment, Role of Multinationals.
4. Planning and Economic Development: Changing role of Markets and Planning, Private-Public
   Partnership.
5. Welfare indicators and measures of growth—Human development indices. The basic needs approach.
6. Development and Environmental Sustainability—Renewable and Non-Renewable Resources, Environmental Economics, Intergenerational equity development.

Economics optional syllabus for UPSC (Paper-II)

Indian Economy in Pre-Independence Era :

1. Land System and its changes,
2. Commercialization of agriculture Drain theory,
3. Laissez faire theory and critique.
4. Manufacture and Transport: Jute, Cotton, Railways, Money and Credit.

Indian Economy after Independence :

The Pre-Liberalization Era :

1. Contribution of Vakil, Gadgil and V.K.R.V. Rao.
2. Agriculture: Land Reforms and land tenure system, Green Revolution and capital formation in agriculture.
3. Industry Trends in composition and growth, Role of public and private sector, Small scale and cottage industries.
4. National and Per capita income: patterns, trends, aggregate and Sectoral composition and changes therein.
5. Broad factors determining National Income and distribution, Measures of poverty, Trends in poverty and inequality.

The Post-Liberalization Era :

1. New Economic Reform and Agriculture: Agriculture and WTO, Food processing, Subsidies, Agricultural prices and public distribution system, Impact of public expenditure on agricultural growth.
2. New Economic Policy and Industry: Strategy of industrialization, Privatization, Disinvestments, Role of foreign direct investment and multinationals.
3. New Economic Policy and Trade: Intellectual property rights: Implications of TRIPS, TRIMS, GATS and new EXIM policy.
4. New Exchange Rate Regime: Partial and full convertibility, Capital account convertibility.
5. New Economic Policy and Public Finance: Fiscal Responsibility Act, Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation.
6. New Economic Policy and Monetary system. Role of RBI under the new regime.
7. Planning: From central Planning to indicative planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments.
8. New Economic Policy and Employment: Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee Scheme.

Benefits of Economics optional syllabus for UPSC

For aspirants who have studied economics through their undergraduate course, economics is one of the popular optional papers amongst them. As a result of this subject’s recent reasonable success rate, an increasing number of students are choosing it.

The following are some benefits of selecting economics as an optional for UPSC Mains:

1. It is a topic that requires logic, analysis, and reason. Answers are hence unbiased.
2. Due to the aforementioned factors, responses are not left for interpretation, resulting in significant scores.
3. It covers almost 60% of the topic of the UPSC GS paper 3 syllabi. Therefore, these optional and core GS subjects have a lot in common.
4. Books and other reference resources are conveniently offered.

Booklist for Economics Optional for UPSC Mains

The following is a list of the books and materials for the economics optional paper.

One need not have to read each of these books. Select and decide on the ones with which you are most at ease.

Additionally, read only the texts that are concerned with the economics optional curriculum and are syllabi focused. 

1. Indian Economy – Ramesh Singh
2. The Indian Economy – Sanjiv Verma
3. Indian Economy – Mishra and Puri
4. Indian Economy – R. Dutt and KPM Sundaram
5. Banking – S.B. Gupta
6. Dictionary of Economics – Graham Bannock; T.E. Baxter, Ray Rees
7. Economic Growth and Development – Mayer and Baldwin
8. Economic Survey: Twelve Five Year Plan: New Industrial Policy – Government of India
9. Economics – Paul A. Samuelson
10. Economics Choice – Koutsweanik
11. The Economics of Development and Planning – M L Jhingan
12. International Economics – Bo Soderston
13. International Economics – H.G. Mannur
14. International Trade – Bo Soderston
15. Macroeconomic Analysis – Edward Shapiro
16. Modern Banking – R.S. Sayers
17. Monetary Theory and Public Policy – Kenneth Kurihara
18. Money Supply in India: Concepts, Compilation and Analysis: Functions and Working – Reserve Bank of India
19. National Income Accounting – Neethu
20. Outline of Monetary Economics – A.C.L. Day
21. Public Finance – H.L. Bhatia
22. Public Finance – K.K. Andley and Sundharam
23. The Economic Times
24. Economic and Political Weekly

Preparation strategy for UPSC Economics optional

You can start with the basic concepts right away if you have an economics degree or studied economics during your undergraduate studies. If you’ve never studied this subject before, you should start with the NCERT books.

The good news is that GS Prelims, core GS topics, and Economics optional all have a lot in common. The fundamentals will be clarified during the preparation of Economics for UPSC Prelims or GS subject for UPSC Mains.

Here are the steps to be followed during UPSC Mains Economics Optional preparation:

1. To grasp a better knowledge of the basic concepts of Economics, it’s advisable to read the NCERTs from Classes VIII to XII.
2. Reading recognised publications by Ramesh Singh or Mishra and Puri will help you understand the essential concepts better.
3. It’s crucial to concentrate solely on the subjects covered by the UPSC Economics optional curriculum while reading the standard books.
4. One must begin with the questions from the previous year. After that, enlist in a reputable test series for mock tests and practise answering questions within the allotted time and space.
5. The optional Economics paper for UPSC Mains Examination includes the static and dynamic aspects. One must Include bits of recent news in responses to give them content richness.

Here are additional strategy tips for preparing for the Economics optional syllabus for UPSC:

1. Understand the Syllabus: The first step is to carefully read and understand the economics optional syllabus for UPSC. Identify the topics that you are comfortable with and those that need more attention.
2. Select Good Study Materials: Select good study materials, including textbooks, reference books, and study guides. Look for books that cover the entire syllabus and are written in an easy-to-understand language.
3. Make a Study Plan: Make a study plan that covers the entire syllabus and gives sufficient time to each topic. Divide the syllabus into smaller chunks and allocate time for revision and practice.
4. Practice Writing Answers: Practice writing answers to the previous year’s question papers and mock tests. This will help you to get familiar with the exam pattern and also improve your writing skills.
5. Attend Workshops: Attend workshops and coaching classes, if possible, to get a better understanding of the subject and clarify any doubts.
6. Stay Updated: Keep yourself updated with the latest economic developments and policies, both in India and abroad. Read newspapers, magazines, and online sources to stay abreast of the latest trends.
7. Revision: Revision is an important part of exam preparation. Allocate sufficient time for revision of the entire syllabus, especially the topics that you find difficult.
8. Time Management: Time management is crucial in the UPSC exam. Practice time management by setting a time limit for answering each question and sticking to it.
9. Be Confident: Finally, be confident in your preparation strategy and stay focused on your goal. Believe in yourself and your abilities, and approach the exam with a positive mindset.

Conclusion

Many candidates choose to take the Economics optional paper because it is very popular and interesting. Examining past years’ question papers and reading recommended books on Economics for UPSC are two ways to prepare.

To be successful in the UPSC Exam, aspirants need to have a fundamental understanding and be familiar with the application of knowledge across every aspect of the Economics curriculum. They should also prepare for General Studies.

By following the right strategy, timely mock tests and keeping in mind one’s health during the preparation journey, the goal can be achieved with hard work and consistent study.

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