Economics is one of the technical subjects that if conceptually clear can open a bundle of opportunities for an individual.The subject in itself is logical and requires conceptual clarity of the syllabus mentioned on the UPSC website https://www.upsc.gov.in/ . The syllabus defined is precise and clear cut. So one thinking of picking this as an optional should first review it unambiguously along with the previous year question papers.
If you are preparing for Indian Economic services along with UPSC CSE, then it’s a bang on to take Economics as an optional as overlapping of the syllabus would help a lot..
However,If you have a background in Economics , say you have done your undergraduation in Economics and Economics as a subject intrigues you as a whole, then you can think of opting it as your optional as it provides an edge over people with non economic background.
Alongside being a coherent subject, it also covers about 60% of the syllabus of GSIII.So, it can be a good match for you if you have interest in Economics.
Don’t worry if you aren’t a graduate in Economics or you don’t have a background in it. You can still choose it. It just requires your dedication and understanding for the subject.Go through syllabus and previous year question papers, explore, develop basic understanding of Economics and then decide upon choosing it as your optional or not. This not only applies to Economics as an optional, but for any optional subject you are confused while choosing upon.
Another thing you can ponder upon while taking Economics as an optional is that it is a mix of theory and practical. It involves graphs, equations and one should have a good hand on mathematics (not advanced).
Syllabus ( Detailed syllabus and previous year question papers : https://www.upsc.gov.in/ )
1. Advanced Micro Economics :
(a) Marshallian and Varrasiam Approaches to Price determination.
(b) Alternative Distribution Theories; Ricardo, Kaldor, Kaleeki.
(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. Advance 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,
Pique and Friedman) and Keyne’s 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 stabilisation of supply, allocative, 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 Adjustment : 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 macromodel.
(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 courtries : Myrdal and Kuzments 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
(e) Welfare indicators and measures of growth—Human Development Indices. The basic needs
(f) Development and Environmental Sustainability—Renewable and Non-renewable Resources,
Environmental Degradation, Intergenerational equity development.
Indian Economics in Post-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) Agricultrure : 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
(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
(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 indivative planning, Relation between planning and
markets for growth and decentralized planning : 73rd and 74th Constitutional
(viii) New Economic Policy and Employment : Employment and poverty, Rural wages,
Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee
Once you have decided your optional as Economics, It is preferred to have a hard copy of the syllabus and previous year question papers. Go through the syllabus thoroughly two to three times at least. Gather all the resources. Almost all books are available online in pdf formats. It is important to note that it doesn’t matter how many books you read, the important thing is how precisely you are covering the topics with conceptual clarity. Your focus should not be on understanding the whole book , but on understanding topics from a given book. It may happen that you like one topic of one author but may not understand another topic from the same book.You can also search precise answers relating to topics that you are not able to find in the books.Also, many upsc optional notes are available online that can aid you in preparation.Dont wait to cover whole syllabus and then jump for writing practice of answers. Start writing once you grasp a bunch of syllabus. write, analyse and if possible get your answers checked by experts by joining a test series
It is important to note here that along with hard work, smartwork plays a major role here. So, good writing practice while covering syllabus and revision is all the more important before final examination.
ALL THE BEST !
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