UPSC Economics Syllabus for IAS Mains

Economics is a popular choice of many students as an optional subject in the main exam. The greatest reason for many students opting for this subject is because it overlaps with the general studies paper in a lot of sections. The mains paper of economics contains two papers – paper 1 and paper 2. Each paper carries 250 marks each, and the time allotted for each paper is three hours duration. 

IAS aspirants who are targeting UPSC Exam may check the linked article.

Economics Syllabus for UPSC

UPSC Economics Syllabus (Paper I)

1. Advanced Micro Economics:

(a) Marshallian and Walrasiam 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 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 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

(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 under development 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 and Unbalanced growth,

(iv) Human Capital and Economic Growth.

(v) Research and Development and Economic Growth

(b) Process of Economic Development of Less developed countries: 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, PrivatePublic 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.

UPSC Economics Syllabus (Paper II)

1. Indian Economy in PreIndependence 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.

2. Indian Economy after Independence:

A. The Pre Liberalization Era:

1. Contribution of Vakil, Gadgil and V.K.R.V. Rao.
2. Agriculture: Land Reforms and land tenure system, Green Revolution and capital formation in agriculture,
3. Industry Trends in composition and growth, Role of public and private sector, Small scale and cottage industries.
4. National and Per capita income: patterns, trends, aggregate and Sectoral composition and changes theirin.
5. Broad factors determining National Income and distribution, Measures of poverty, Trends in poverty and inequality.

B. The Post Liberalization Era:

1. New Economic Reform and Agriculture: Agriculture and WTO, Food processing, Subsidies, Agricultural prices and public distribution system, Impact of public expenditure on agricultural growth.
2. New Economic Policy and Industry: Strategy of industrialization, Privatization, Disinvestments, Role of foreign direct investment and multinationals.
3. New Economic Policy and Trade: Intellectual property rights: Implications of TRIPS, TRIMS, GATS and new EXIM policy.
4. New Exchange Rate Regime: Partial and full convertibility, Capital account convertibility.
5. New Economic Policy and Public Finance: Fiscal Responsibility Act, Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation.
6. New Economic Policy and Monetary system. Role of RBI under the new regime.
7. Planning: From central Planning to indicative planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments.
8. New Economic Policy and Employment: Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural Employment Guarantee Scheme.

Also, Check Other Optional Subject’s Syllabus

Preparation tips for Economics Subject

• Economics is a subject that places more importance on representations in diagrams and other illustrations. Candidates should place equal weight age to theory and representations.
• This subject is completely rid of any maths problems or numerical. Clearly, understand what the theorem or model is trying to decipher and how it is connected to the topic under study. 
• Supporting your answers with good references to assumptions carries a lot of weightage. If you can remember assumptions from theorems, that’s a plus point indeed.
• A statistical representation of data, though difficult to remember, is very important from the exam point of view. 
• It’s not necessary to memorize all statistical data. Remember only the necessary and important ones. 
• Be thorough with concepts of micro and macroeconomics to reach higher levels of understanding in the subject. 
• Direct explanations from reference books for this subject may be difficult to find. It’s best to write down one’s notes by clubbing relevant points from a minimum of two standard books. 
• The subject is also quite general knowledge afflicted. So if a particular topic is not found in books, internet search engines can provide a lot of relevant information. 
• International economics is a topic dedicated entirely to diagrammatic representations. 
• Candidates are advised to refer to research papers by expert economists and write down key points from each such paper to present in the exam. 
• Using graphs for answers yields better marks. 
• Learn the vocabulary of the language, and stick to its technical meanings, keep a reference subject dictionary in hand. 
• Be concise and clear in your answers. Writing long stories with general information is not going to help in any way. 
• Approach questions that you are confident and can answer them with a logical write-up. 
• Support your views strongly with factual data. 
• Use case studies and examples with real-life scenarios as and when possible in your narrative type of answers, especially in paper 2. 
• Practise answer writing in your preparation time before you attempt them in the exam paper. 

Suggestive books to refer for economics in mains exam

The list presented guides candidates on some of the reference books they can refer to help them through the preparation process: 

• Book on Indian Economy by Ramesh Singh
• Book on Indian Economy by writers Mishra & Puri
• Book giving extensive notes on ‘Banking,’ by S.B. Gupta
• Refer to the glossary of terms from ‘Dictionary of Economics by Graham Bannock and T.E. Baxter and Ray Rees.
• Book on Economics by Paul A. Samuelson
• Book dealing with ‘International Economics’ by Bo Soderston
• Book on Macroeconomic Analysis by Edward Shapiro
• For explanations refer ‘Monetary Theory and Public Policy by Kenneth Kurihara’
• Reserve Bank of India book on Concepts, Compilation, and Analysis: Functions and Working
• Book on Public Finance by H.L. Bhatia
• Read at least one newspaper, like The Economic Times.
• Magazines like Economical and Political Weekly

Also, Read Other UPSC Articles