Overview of Economics Optional Subject
Economics Optional Syllabus :Economics is a widely chosen optional subject in the UPSC Civil Services Mains Examination. It delves into various aspects of economic theory, policies, and their applications. The subject is ideal for candidates with a strong background or interest in economics, finance, or public policy.
Why Choose Economics as an Optional?
Strong Background: If you have a degree in economics, finance, or related fields, this subject allows you to leverage your academic expertise.
High Scoring Potential: Economics can be a high-scoring subject with clear concepts and a strong understanding of both theory and application.
Relevance to General Studies: Many topics in economics overlap with General Studies papers, particularly in areas like economic development, government policies, and international relations.
Analytical Approach: Economics involves a lot of analysis and critical thinking, making it an engaging subject for those who enjoy exploring complex issues.
Who Should Take Economics Optional?
Economics Graduates: If you have a degree in economics or a related field, this subject aligns well with your academic background.
Candidates with Interest in Economic Policies: If you are interested in understanding and analyzing economic policies, development strategies, and public finance, this subject will keep you engaged.
Aspirants Seeking an Analytical Subject: If you enjoy solving problems and analyzing data, economics is a solid choice.
Economics Optional Syllabus Paper-I
This paper covers microeconomics, macroeconomics, and international economics. Key topics include demand and supply, market structures, national income, inflation, and trade theories.
| Topic | Details |
|---|---|
| 1. Advanced Micro Economics | (a) Marshallian and Walrasian Approaches to Price determination. |
| (b) Alternative Distribution Theories: Ricardo, Kaldor, Kalecki. | |
| (c) Markets Structure: Monopolistic Competition, Duopoly, Oligopoly. | |
| (d) Modern Welfare Criteria: Pareto Hicks and Scitovsky, Arrow’s Impossibility Theorem, A. K. Sen’s Social Welfare Function. | |
| 2. Advanced Macro Economics | Approaches to Employment Income and Interest Rate determination: Classical, Keynes (IS-LM curve), Neo-classical synthesis and New classical, Theories of Interest Rate determination and Interest Rate Structure. |
| 3. Money-Banking and Finance | (a) 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. |
| (b) 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. | |
| 4. International Economics | (a) Old and New theories of International Trade. |
| (i) Comparative advantage, | |
| (ii) Terms of Trade and offer curve. | |
| (iii) Product cycle and Strategic trade theories. | |
| (iv) Trade as an engine of growth and theories of underdevelopment in an open economy. | |
| (b) Forms of protection: Tariff and quota. | |
| (c) Balance of Payments Adjustments: Alternative Approaches. | |
| (i) Price versus income, income adjustments under fixed exchange rates. | |
| (ii) Theories of Policy mix. | |
| (iii) Exchange rate adjustments under capital mobility. | |
| (iv) Floating Rates and their implications for developing Countries: Currency Boards. | |
| (v) Trade Policy and Developing Countries. | |
| (vi) BOP, adjustments and Policy Coordination in open economy macro-model. | |
| (vii) Speculative attacks. | |
| (viii) Trade Blocks and Monetary Unions. | |
| (ix) WTO: Trims, TRIPS, Domestic Measures, Different Rounds of WTO talks. | |
| 5. Growth and Development | (a) (i) Theories of growth: Harrod’s model; |
| (ii) Lewis model of development with surplus labour. | |
| (iii) Balanced Unbalanced Growth. | |
| (iv) Human capitals and Economic Growth. | |
| (v) Research and Development and Economic Growth. | |
| (b) 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. | |
| (c) Economic Development and International Trade and Investment, Role of Multinationals. | |
| (d) Planning and economic Development: changing role of Markets and Planning, Private-Public Partnership. | |
| (e) Welfare indicators and measures of growth—Human development indices. The basic needs approach. | |
| (f) Development and Environmental Sustainability—Renewable and Non Renewable Resources, Environmental Degradation, Intergenerational equity development. |
Economics Optional Syllabus Paper-II
This paper focuses on Indian economics, growth and development, and public finance. It also includes topics like planning, poverty, unemployment, and the role of the government in economic development.
| Topic | Details |
|---|---|
| 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 | |
| A. The Pre-Liberalization Era | |
| (i) Contribution of Vakil, Gadgil and V.K.R.V. Rao. | |
| (ii) Agriculture | Land Reforms and land tenure system, Green Revolution and capital formation in agriculture. |
| (iii) Industry | Trends in composition and growth, Role of public and private sector, Small scale and cottage industries. |
| (iv) National and Per capita income | Patterns, trends, aggregate and Sectoral composition and changes therein. |
| (v) Broad factors determining National Income and distribution | Measures of poverty, Trends in poverty and inequality. |
| B. 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 | 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, 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. |
Preparation Strategy for Economics Optional
Understand the Syllabus: Start by thoroughly understanding the Economics Optional Syllabus. Break it down into manageable sections and create a detailed study plan.
Focus on Core Concepts: Build a strong foundation in microeconomics, macroeconomics, and Indian economics. These areas form the base for the rest of the syllabus.
Use Diagrams and Graphs: Economics involves a lot of diagrams and graphs. Practice drawing them accurately as they are crucial for explaining concepts in the exam.
Regular Revision: Make concise notes of important theories, models, and formulas. Regular revision of these notes will help reinforce your understanding.
Solve Previous Year Papers: Practice with previous years’ question papers to understand the exam pattern and the types of questions asked.
Stay Updated with Current Affairs: Economics is a dynamic subject that is closely linked to current affairs. Stay updated with the latest economic developments, both in India and globally.
Recommended Books and Study Materials
Microeconomics:
- “Microeconomic Theory” by H.L. Ahuja
- “Advanced Microeconomic Theory” by M. J. Osborne
Macroeconomics:
Indian Economics:
- “Indian Economy” by Ramesh Singh Buy Now!
- “Indian Economy” by Uma Kapila Buy
International Economics:
- “International Economics” by Paul R. Krugman
- “International Economics” by H.G. Mannur
Growth and Development:
- “Economic Development” by Michael P. Todaro and Stephen C. Smith
- “The Economics of Development and Planning” by M.L. Jhingan
Previous Year Papers:
- Solve past UPSC Economics Optional question papers to get familiar with the exam format.
Final Thoughts
Economics is a strong optional subject for candidates with a background or interest in economic theory and policy. The Economics Optional Syllabus is comprehensive, covering both theoretical and applied aspects of the discipline. To excel in this subject, focus on mastering core concepts, practicing diagrams, and staying updated with current economic developments. Regular revision and practicing previous year papers will also enhance your preparation.
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