UPSC Economics Optional Syllabus- Syllabus: Paper I and Paper II

Of the 48 optional papers for UPSC, the economics optional is generally preferred by those who have had economics as a subject during their bachelor’s course. Over the past years, the economics optional has helped candidates improve their scores, leading to increased popularity amongst future aspirants.  

Economics as an optional subject is analytical and requires the use of rational logic. Therefore, this optional subject is relatively objective. So, answering them is easier than most other subjects.  This makes economics a highly scoring option.

Almost 60% of the General Studies Paper 3 is covered in economics, leading to many materials for studying. With an additional 40% syllabus to cover for the Economics optional, it becomes easier to complete the syllabus. Let’s look at the UPSC Economics Optional Syllabus in detail to know more about this exam.

Economics Optional Syllabus for UPSC

UPSC Economics Optional Syllabus: Paper I

Advanced Micro Economics

• Marshallian and Varrasiam Approach to Price determination
• Alternative Distribution Theories – Kaleeki, Kaldor, & Ricardo
• Markets Structure – Oligopoly, Duopoly, Monopolistic Competition
• Modern Welfare Criteria – Social Welfare Function of A. K. Sen, Impossibility Theorem of Arrow, Pareto Hicks and Scitovsky

Advanced Macro Economics

• Approaches to Employment Income and Interest Rate determination:

• Classical
• Keynes (IS)-LM) curve
• Neoclassical synthesis & New classical
• Interest Rate Determination Theories & Interest Rate Structure

Money-Banking & Finance

• Demand for & Supply of Money

• Money Multiplier Quantity Theory of Money (Fisher, Pique, & Friedman)
• Demand for Money Theory of Keyne
• Instruments & Goals for Monetary Management in Open & Closed Economies
• Relation between Treasury & Central Bank
• Proposal for ceiling on the growth rate of money
• Public Finance & the role it plays in a Market Economy

• In supply stabilisation, resource allocation & development, and distribution
• Government revenue sources, various Subsidies & Taxes forms, their effects & incidence. Limits to taxation, loans, crowding-out effects, & limits to borrowings
• Public expenditure & its effects

International Economics

• Old and New International Trade Theories

• Comparative advantage
• Terms of Trade & Offer Curve
• Product Cycle & Theories of Strategic Trade
• Trade as a growth engine & theories of underdevelopment in open economies
• Forms of Protection:
• Tariff & quota
• Balance of Payments Adjustment – Alternative Approaches

• income versus price, adjustments of income in fixed exchange rates
• Policy Mix Theories
• adjustments of the exchange rate under capital mobility
• Floating Rates & what implications they have for Developing Countries – Currency Boards
• Policies of Trade & Developing Countries
• Balance of Payments, adjustments & policy coordination in an open economy macro-model.
• Speculative attacks
• Monetary Unions & Trade Blocks
•  World Trade Organisation (WTO)- Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Agreement on Trade-Related Investment Measure (TRIMs), Domestic Measures, the various Rounds of WTO talks

Growth and Development

• Theories of growth
• Harrod’s model
• The Lewis model of development with surplus labour
• Balanced Unbalanced Growth
• Human Capitals & Economic Growth
• Research & Development & Economic Growth
• Economic Development Process in countries that are less developed 
• Kuzments & Myrdal on structural change and economic development
• Role of Agriculture in the Economic Development of countries that are less developed 
• Economic Development and International Trade and Investment, Role of Multinationals
• Planning & Economic Development
• The changing role of planning & markets
• Indices of Human Development 
• The basic needs approach
• Development & Environmental Sustainability
• Non-renewable & Renewable Resources
• Degradation of Environmental 
• Intergenerational equity development

UPSC Economics Optional Syllabus: Paper-II

• Indian Economics in the Post-independence Era
• Land system and its changes, agriculture commercialisation, Drain theory, Laizzes Faire theory and critique
• Manufacture and transport – cotton, jute, Railways, credit and money

Pre-Liberalisation Era

• The contribution made by Vakil, V.K.R.V. Rao & Gadgil
• Agriculture – Land Reforms & system of land tenure, the Green Revolution &formation of capital in agriculture
• Industry Trends for composition & growth, Private and public sectors’ role, small scale industries & cottage industries
• Per capita & national income – trends, patterns, sectoral composition & aggregate & changes therein
• Broad factors that determine the National Income & distribution, Measures of poverty, Trends in poverty & inequality

Post-Liberalisation Era 

• New Economic Reform & Agriculture
• Private-Public Partnership
• Welfare indicators & growth measures
• Agriculture & WTO
• Subsidies
• Food processing
• Agricultural prices & public distribution system
• How public expenditure impacts agricultural growth
• New Economic Policy & Industry
• Industrialisation strategy
• Disinvestments
• Privatisation
• Role of multinationals & foreign direct investment and 
• New Economic Policy & Trade
• Intellectual property rights
• Implications of General Agreement on Trade in Services (GATS), TRIMS, TRIPS & new Export-Import Bank of India (EXIM) policy
• New Exchange Rate Regime
• Convertibility – Partial & full 
• Capital account convertibility
• New Economic Policy & Public Finance
• Fiscal Responsibility Act
• Twelfth Finance Commission & Fiscal Federalism & Fiscal Consolidation
• The New Economic Policy & Monetary System
• RBI’s Role in the new regime
• Planning 
• From Central Planning to indicative planning, 
• Relationship between planning & markets for growth & decentralised planning
• 73rd Constitutional amendment & 74th Constitutional amendment
• New Economic Policy and Employment
• Employment & poverty
• Employment Generation
• Rural wages
• Schemes for poverty alleviation
• New Rural, Employment Guarantee Scheme

Conclusion

Economics is a highly scoring subject and a good choice since it is also objective in nature. Choosing it provides a good chance of increasing one’s score.  For those of you who have Economics as a subject, revising and moving on to new topics is advised.  Follow the economics optional syllabus thoroughly to get a solid grasp on the concepts that would come in the exam. For those who have not studied economics till now, it is of crucial importance, to begin with, the basics, for which you can pick up the NCERT economics books meant for schools. 

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