“Economics is the art to meet unlimited needs with scarce resources.” – Laurence J. Peter
Find here all the preparation strategies needed to cover the Economics syllabus for UPSC Prelims and as optionals for Mains exam. How to study Economics for UPSC exam?
If you are preparing to take the UPSC civil services exam you will know that economics is an unavoidable part of the UPSC syllabus – both the IAS prelims and the mains. It is also offered as an optional subject in the UPSC mains papers. This article talks about the economics syllabus for UPSC Prelims, mains and the economics optional, along with a few tips on how to tackle the topics under this section.
Let us first talk about the prelims Economics UPSC syllabus.
Indian Economy syllabus for UPSC prelims/UPSC Economics syllabus for prelims/syllabus of Economics for UPSC prelims:
Economic and Social Development: sustainable development, poverty, inclusion, demographics, social sector initiatives, etc.
Here, you must cover topics such as economic growth and development, finance, banking, budget, balance of payments, poverty and related issues, population composition and related characteristics, social sector initiatives related to education, health and sanitation, and international financial institutions.
Important area to focus in the UPSC economy syllabus:
- Economic growth and development – basic concept and definition of economy and economics, uses and transfer of resources, distributive effects, macro and micro economic policy, micro-macro balance, distributive impact of economic policies, development versus growth, determinant of growth and development, concepts such as HPI/MPI, HDI, PQLI, GEM, GDI/GII, TAI, Green index, sustainable development, India’s ranking in the various indices.
- Poverty – definitions, causes, distribution-deprivation, income versus calories, measurement of poverty, status of poverty, eradication programmes, poverty and resource policy, tribal rights and issues, livelihood mission.
- Inclusion – definition, relevance, types, financial inclusion, recent initiatives.
- Demographics – census data, populations by gender, by state, by age group, socio-economic status, caste, religion, literacy levels, etc. Trends in human development – interstate comparison, etc.
- Fiscal policy – definition, component, receipts, revenue and capital account, tax revenue, expenditure, budget.
The following question is on budget:
Q) With reference to Union Budget, which of the following, is/are covered under Non-Plan Expenditure? (GS Paper I, 2014)
- Defense -expenditure
- Interest payments
- Salaries and pensions
Select the correct answer using the code given below.
- 1 only
- 2 and 3 only
- 1, 2, 3 and 4
- Social issues – financing health policy, education policy, sanitation, drinking water, social security, infrastructure policy, international trade issues, regional cooperation.
- Also, focus on issues currently in news related to the above topics – MNERGS, MSMEs, Make in India, industrial corridors, NITI Ayog, black money, international treaties and organisations, India’s policies with neighbours.
Example questions from UPSC prelims papers under economics topics:
Q) If the interest rate is decreased in an economy, it will (GS Paper I, 2014)
- decrease the consumption expenditure in the economy
- increase the tax collection of the Government
- increase the investment expenditure in the economy
- increase the total savings in the economy
Q) Which one of the following is likely to be the most inflationary in its effect? (GS Paper I, 2013)
- Repayment of public debt
- Borrowing from the public to finance a budget deficit
- Borrowing from banks to finance a budget deficit
- Creating new money to finance a budget deficit
Now let us discuss about the UPSC mains.
Indian Economy syllabus for UPSC mains/Economics syllabus for UPSC mains:
UPSC Economics syllabus for mains is included in the General Studies Paper III which contains a topic Economic Development.
AREAS TO FOCUS:
- Indian Economy and issues relating to planning, mobilization of resources, development, growth and employment.
- Inclusive growth
- Major cropping patterns in different parts of the country, different types of irrigation, transport and marketing of agricultural produce and issues and associated constraints; e-technology for
- Direct and indirect farm subsidies and minimum support prices; PDS- objectives, functioning, limitations; issues of buffer stocks, food security; economics of animal-rearing, Technology missions.
- Food processing and related industries
- Land reforms
- Effects of liberalisation
- Infrastructure: energy, roads, ports, airports and railways
- Investment models
Suggested books to read for economics topics of General Studies Paper III:
- NCERT text book classes X, XI, XII
- Indian Economy – Ramesh Singh
- Indian Economy – Sanjeev Verma
- Ministry websites of water, power, etc.
- Economic Survey
- Administrative Reforms Commissions (ARC) Reports
Example questions from UPSC mains General Studies Paper III:
Q) “While we flaunt India’s demographic dividend, we ignore the dropping rates of employability.” What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain. (200 words) GS Paper III, 2014
Q) Foreign Direct Investment (FDI) in the defence sector is now set to be liberalized. What influence this is expected to have on Indian defence and economy in the short and long run? (200 words) GS Paper III. 2014
As you can see, the questions are linked to the syllabus but are taken from current happenings. Apart from a thorough understanding of theoretical concepts, you should also be able to analyse the impact of various governmental policies and steps. Click on the following link to watch video lectures on various current affairs topics related to economics.
Now, let us focus on the economics optional papers.
Syllabus for UPSC mains Economics Optional:
Click the below link for the UPSC mains economics optional syllabus.
You can check the detailed syllabus of UPSC prelims here.
IMPORTANT TOPICS TO FOCUS ON:
- Features of Indian Economy – division of economic activities, poverty, unemployment, HDR, measures to eradicate poverty
- Basic Economic Indicators – national income, price index, production, population, foreign trade
- Population – growth, census, consumption pattern (energy)
- National income – concepts, methods of calculation
- Agriculture – crops, seasons, agricultural credit agencies, Kisan Credit agencies, land reforms, insurance, green, white, blue, yellow revolutions, irrigation
- Industry – industrial policies (1948, 1956, 1991), small scale industries, key industries, industrial sickness, the different committees, disinvestment, PSU policy, industrial finance
- Foreign trade – composition, direction, EXIM policy, WTO, balance of payments, measures to improve foreign trade
- Money and banking – Money market, credit control (different rates), commercial banks, cooperative banks, NBFCs, committees, SEBI, stock market developments, insurance industry, new banking sector reforms, money supply measures, inflation, deflation
- International organisations
- Planning commission – five year plans
- Public finance – finance commission, taxation, deficit financing, public spending and debt
Topic-wise distribution of questions in the economics optional in UPSC mains:
|Topics||Probable Number of Questions|
|Micro and Macro Economics||35-40|
|Money, Banking & Public Finance||10-15|
|Growth and Development||10|
Tips for answer writing in the economics optional paper in the UPSC mains:
- Use graphs wherever possible to justify and enhance your answers.
- Economics is a precise science. Make sure to use the correct technical words. For example, don’t use income when you mean revenue.
- In UPSC economics paper, avoid the use of equations as much as possible. Graphs should do the trick.
- Validate your answers with data and figures as much as possible. This will show your command over the concepts and also your understanding of current day scenario. Sure-shot way to score marks.
- Also give ample examples from real life to rationalise your answers.
Suggested study material for UPSC mains economics optional:
- Indian Economy – Mishra-Puri, Dutt-Sundaram
- The Economics of Development & Planning – M. L. Jhingan
- International Economics – H.G. Mannur
- For statistics – NCERT Class XI book
- Public Finance – H.L. Bhatia
- Money and Banking – S.B.Gupta and special issue of Pratiyogita Darpan
- Macroeconomic Theory – M. L. Jhingan and NCERT book
- Modern Microeconomics – A. Koutsoyiannis and NCERT book
Also, go through previous year question papers for improving your answer writing in the IAS exams. Get the Previous Year UPSC Question Papers here.
For points on writing answers to Economics questions for UPSC prelims exam, click on the following:
UPSC Preparation related queries
- Which are the most important books to cover the Economy syllabus for UPSC Exam?
- Economy is one of the four core subjects in the UPSC exam syllabus. For clear understanding of the basic concepts and comprehensive coverage of the syllabus, it is advisable to go through “Indian Economy” by Ramesh Singh or “The Indian Economy” by Sanjeev Verma.
- Is Micro Economics important for UPSC Exam?
- Though a few conceptual questions could appear in the Prelims Examination, it is highly unlikely that direct questions from Microeconomics appear in the GS Paper-3 in the Mains Exam. Economic Survey and Economics Current Affairs must be covered on a regular basis to score good marks in both prelims and mains.
- What is Economic Survey?
- Economic Survey is the annual document of the Ministry of Finance, usually presented just before the Budget. It consists of a detailed account of the sectors of the economy and the overall economic scenario in the country. It is an indispensable source for UPSC Exam preparation.
- How good is Economics Optional for UPSC Mains?
- If one has a good hold over the subject or has a strong interest in the subject, Economics optional is one of the best optionals that can be chosen for mains. It is easy to find study material and coaching for the optional. An additional benefit is that choosing Economics optional will help you cover a portion of General Studies Paper-3 Syllabus.
- Does Economics Optional help in covering GS Syllabus?
- Economics optional syllabus does have an overlap with the economics syllabus in General Studies Paper 3. Hence, preparing for Economics optional will help in covering a portion of General Studies Paper 3 syllabus.