Economics has been included as one one the optional subject in Civil Services exam by UPSC due to its immense importance in policy implementation mechanics, governance and understanding human behaviour to policies which will be beneficial for a future civil servant in performing his/her duties.
Economics as an optional paper has helped many boost there score and become rank holders. The most famous with this optional is perhaps Gaurav Agrawal, the first ranker in the civil services 2013 exam. He scored 134 and 162 marks in the optional papers.
| Name | Year | Rank |
|---|---|---|
| Kumar Anurag | 2018 | 48 |
| Abhijeet Sinha | 2017 | 19 |
| Tejasvi Rana | 2016 | 12 |
| Namami Bansal | 2016 | 17 |
| Gaurav Agrawal | 2013 | 1 |
| Haritha V Kumar | 2012 | 1 |
| Harshika Singh | 2011 | 8 |
1. Overlap with General Studies
Cover huge chunk of GS3 paper and topics such as Agriculture, Post 1947 India, Annual Economic survey, Budget, etc.
2. Hand in hand with Current Affairs
A part of the Economics optional Paper 2 syllabus is trend analysis (which can help strengthen historical knowledge for current affairs) and ongoing economic affairs in India.
3. Helps in UPSC Interview
Helps prepare an analytical and objective mindset to tackle each question from economic and public behaviour point of view.
4. Fixed Syllabus
Unlike some other subjects, the syllabus for Economics optional is limited and can be extinguished.
5.Predictable Paper
Past 10 years PYQ covers all topics that can be covered in UPSC Economics optional Paper 1 and Paper 2 have questions on similar lines as PYQ, e.g trend analysis.
6. Is scoring
Because there are numerical and theoretical questions, answers are sometimes straightforward and aspirants can score well
7. Can be opted by aspirants with no economics background
A thorough reading of Class XI & Class XII Economics NCERT is the only pre-requisite to start Economics optional.
There are some challenges to the preparation and exam writing for Economics optional
1. Paper 2 requires extensive note making by self and reading multiple books and forming opinions
2. Because diagrams have to be made while answering questions, multiple practices are required to gain speed and efficiency in free hand drawing.
3. A lot have data needs to be learnt. So you must be ready to “like numbers”
1. Advanced Micro-Economics:
a. Marshallian and Walrasian Approaches to Price Determination.
b. Alternative Distribution Theories: Ricardo, Kaldor, Kaleeki.
c. Markets Structure: Monopolistic Competition, Duopoly, Oligopoly.
d. Modern Welfare Criteria: Pareto Hicks & Scitovsky, Arrow’s Impossibility Theorem, A.K. Sen’s Social Welfare Function.
2. Advanced Macroeconomics:
a. Approaches to Employment Income and Interest Rate Determination
b. Classical, Keynes (IS-LM) Curve,
c. Neo Classical Synthesis and New Classical Theories of Interest Rate Determination andInterest Rate Structure.
3. Money – Banking and Finance:
a. Demand for and Supply of Money: Money Multiplier Quantity Theory of Money (Fisher, Pique and Friedman) and Keynes’s Theory on Demand for Money, Goals and Instruments of Monetary Management in Closed and Open Economies; Relation between Central Bank and the Treasury; Proposal for a ceiling on the growth rate of money.
b. Public Finance and its Role in Market Economy: In stabilization of supply, allocation of resources and in distribution and development; Sources of Govt. 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.
4. International Economics:
a. 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 under development in an open economy.
b. Forms of Protection: Tariff and Quota.
c. 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
● Theories of growth : Harrod’s model
● Lewis model of development with surplus labour
● Balanced Unbalanced Growth
● Human capitals and Economic Growth
● Research and Development and Economic Growth
● 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
● Economic Development and International Trade and Investment, Role of Multinationals
● Planning and economic Development: changing role of Markets and Planning, Private-Public Partnership
● Welfare indicators and measures of growth – Human development indices. The basic needs approach
● Development and Environmental Sustainability – Renewable and Non Renewable Resources, Environmental Degradation, Intergenerational equity development
Indian Economy in Pre-Independence Era
Land System and its changes, Commercialization of agriculture Drain theory, Laissez faire theory and critique. Manufacture and Transport: Jute, Cotton, Railways, Money and Credit
Indian Economy After Independence
● 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
✅ New Economic Reform and Agriculture: Agriculture and WTO, Food processing, Subsidies, Agricultural prices and public distribution system, Impact of public expenditure on agricultural growth
✅ New Economic Policy and Industry: Strategy of industrialization, Privatization, Disinvestments, Role of foreign direct investment and multinationals
✅ New Economic Policy and Trade: Intellectual property rights: Implications of TRIPS, TRIMS, GATS and new EXIM policy
✅ New Exchange Rate Regime: Partial and full convertibility, Capital account convertibility
✅ New Economic Policy and Public Finance: Fiscal Responsibility Act, Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation New Economic Policy and Monetary System. Role of RBI under the new regime
✅ Planning: From central Planning to indicative planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments
✅ New Economic Policy and Employment: Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee Scheme
✅ Multiple revisions are essential to gain clarity on topics
✅ Regular practice of diagrams
✅ Forming charts to understand trends in economy
✅ Using numbers and data wherever possible
✅ Being updated with Economic Developments in economy via newspaper, annual surveys, budget.
✅ Regularly practice question writing
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