Optional subjects play an important role in the UPSC. The optional subject should not be chosen by copying others or by seeing success rates. The criteria of choosing optional paper should be based on the interest of the candidate. Economics is one of the popular optional subjects in UPSC.

It’s the most scoring optional subject. Candidates who have studied Economics in graduation can score well in the examination. The success rates of economics subjects are very high. People like to choose it oftenly.

Economics is a very interesting subject to study. Many toppers have chosen it in mains exams and got good marks. The topics of economics relevant with current times. Candidates with a previous background of economics have an additional advantage. If a candidate can understand the syllabus well, they can cover it easily. Preparation time may be differ from others. 

Here, in the article we will discuss the UPSC Syllabus, preparation strategy and advantages of taking economics as an optional subject in UPSC examination.

Syllabus of Economics optional paper

Paper – I

• Advanced Microeconomics

• Marshallian and Varrasiam Approach to Price determination.
• Alternative Distribution Theories; Ricardo, Kaldor, Kaleeki.
• Market Structure: Monopolistic Competition, Duopoly, Oligopoly.
• Modern Welfare Criteria: Pareto Hicks and Scitovsky, Arrow’s Impossibility Theorem, A. K. Sen’s Social Welfare Function

• Advanced Macroeconomics

• Approaches to Employment Income and Interest Rate determination:
• Classical,
• Keynes (IS)-LM) curve,
• Neoclassical synthesis and New classical,
• Theories of Interest Rate determination and Interest Rate Structure

• Money-Banking and Finance

(i) Demand for and Supply of Money

• Money Multiplier Quantity Theory of Money (Fisher, Pique, and Friedman)
• Keynes’s Theory on Demand for Money,
• Goals and Instruments of Monetary Management in Closed and Open Economies.
• The relation between the Central Bank and the Treasury.
• Proposal for ceiling on the growth rate of money

(ii) 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

3. 
   

   International Economics

(i) 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

(ii) Forms of Protection

• Tariff and quota

(iii) Balance of Payments Adjustment: 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

(i) Theories of growth

• Harrod’s model;
• Lewis model of development with surplus labor.
• Balanced Unbalanced Growth.
• Human Capitals and Economic Growth.
• Research and Development and Economic Growth

(ii) Process of Economic Development of less developed countries

• Myrdal and Kuzments on economic development and structural change:
• Role of Agriculture in Economic Development of less developed countries

(iii) Economic Development and International Trade and Investment, Role of Multinationals

(iv) Planning and Economic Development

• Changing role of Markets and Planning,
• Private-Public Partnership

(vi) Welfare indicators and measures of growth

• Human Development Indices.
• The basic needs approach

(vii) Development and Environmental Sustainability

• Renewable and Non-renewable Resources,
• Environmental Degradation,
• Intergenerational equity development

Economics Syllabus For Paper-2

• The Pre-Liberalization Era

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

• The Post-Liberalization Era

(i) New Economic Reform and Agriculture

• Agriculture and WTO, 
• Food processing, 
• Subsidies, 
• Agricultural prices and public distribution system, 
• Impact of public expenditure on agricultural growth

(ii) New Economic Policy and Industry

• The strategy of industrialization, 
• Privatization, 
• Disinvestments, 
• Role of foreign direct investment and multinationals

(iii) New Economic Policy and Trade

• Intellectual property rights: 
• Implications of TRIPS, TRIMS, GATS and new EXIM policy

(iv) New Exchange Rate Regime

• Partial and full convertibility, 
• Capital account convertibility

(v) New Economic Policy and Public Finance

• Fiscal Responsibility Act, 
• the Twelfth Finance Commission and 
• Fiscal Federalism and 
• Fiscal Consolidation

(vi) New Economic Policy and Monetary System

• Role of RBI under the new regime

(vii) Planning

• From central Planning to indicative planning, 
• Relation between planning and markets for growth and decentralized planning : 
• 73rd and 74th Constitutional amendments

(viii) New Economic Policy and Employment

• Employment and poverty, 
• Rural wages, 
• Employment Generation, 
• Poverty alleviation schemes, 
• New Rural, Employment Guarantee Scheme

Advantages of taking Economics as an optional paper for UPSC

• Scoring subject

Economics is one of the most scoring subjects in the UPSC examination. Reading the newspaper regularly can cover most of the topics in economics. 

• Easy to understand

The subject of economics is analytical, rational and logical. it’s easy to understand. 

• Overlaps with the GS subjects

Economics covers about 60% of the UPSC syllabus for GS paper -3. There is a significant overlap between this optional and core GS subject. if a candidate chooses economics as an optional subject,it would be easy for them to cover the syllabus.

• Study material is easily available

study material of economics is easily available. Candidates can prepare for it by self study. Self-prepared notes help a lot in preparation. Candidates can prepare notes by best reference books and from the internet.

• Syllabus is clearly defined

Syllabus of economics is short and it is defined very clearly. It’s easy for candidates to understand. If a candidate learns by conceptual clarity, they can score good marks in economics.

Preparation strategy of economics optional paper for UPSC

• Understand the syllabus

Without understanding the syllabus you can not prepare well for the subject. Understanding the syllabus is important to know the exact pattern of the examination.

• Learn by conceptual clarity 

Conceptual clarity is an important aspect to prepare for any subject. 

• Clear the basics

If you don’t have any previous background related to the subject, study the basics. NCERT books are the best and reliable sources for preparing economics. After clearing the basics you can move on to other books.

• Study with best reference books

Always study with the best reference books. Keep your sources limited. If you study with too many books, it will confuse you in the end. study hard and start with NCERT books. Best reference books are listed below:-

• Ramesh Singh
• The Indian Economy – Sanjiv Verma
• Indian Economy – Mishra and Puri
• R. Dutt and KPM Sundaram
• Banking – S.B. Gupta
• Dictionary of Economics – Graham Bannock; T.E. Baxter, Ray Rees
• Economic Growth and Development – Mayer and Baldwin
• Survey: Twelve Five Year Plan: New Industrial Policy – Government of India
• Paul A. Samuelson
• Economics Choice – Koutsweanik
• Growth and Development – M L Jhingan
• International Economics – Bo Soderston
• Economics – H.G. Mannur or Salvatore
• International Trade – Bo Soderston

• Prepare a well structured study plan

Well structured study plan helps to cover the syllabus on time. Make a time-table for study. Cover hard topics first. If you want to cover the whole syllabus, you have to manage a well structured study plan. Without a study plan you can not manage all the subjects. Syllabus of UPSC is vast and you have to cover all the subjects. study by making a well structured study plan.

• Self prepared notes

Self-prepared notes are the best source of preparation. Best IAS Coaching in Delhi classes can not give you in-depth knowledge of the subject. Try to write handwritten notes to remember the topics for a long time. Writing your own notes will help you to understand the concepts better.

• Revision

It has many topics to memorize. Economics covers a significant portion at all the 3 stages of this exam. Economics is a scoring paper if anyone takes up the optional paper. For the preparation of an Economics paper you have to study by understanding the concepts. Every subject is good enough if you study systematically. UPSC examinations need hard work and dedication. your preparation and score well in the exam.

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