Ø  Economics is one of the optional subjects offered by the UPSC in the civil services mains exam. Though not as popular as some other subjects like Public Administration or Geography, Economics has a good success rate among candidates. There have been toppers with this optional also.

Ø  Economics is a very interesting optional and over the past few years, it has gained a lot of popularity mainly owing to the fact that many toppers had chosen this optional and it has been a scoring subject all along. The subject is technical and at the same time it is equally relevant in current times.

Ø  As mentioned above, the success rate has been good for aspirants who have chosen economics optional. Candidates who have a previous background in this subject definitely have an added advantage and can easily complete the syllabus in lesser span of time due to the familiarity of concepts.  In case of an aspirant being a complete novice to the subject, it might take a considerate time to complete the syllabus. The preparation time caries from individual to individual. The first step towards effective optional preparation is to go through the entire syllabus and keep the syllabus handy.


Economics Optional Syllabus For Paper-1

Advanced Micro Economics

Ø  Marshallian
and Walrasian Approach to Price determination.

Ø  Alternative Distribution Theories; Ricardo, Kaldor, Kaleeki.

Ø  Markets
Structure: Monopolistic Competition, Duopoly, Oligopoly.

Ø  Modern
Welfare Criteria: Pareto Hicks and Scitovsky, Arrow’s Impossibility Theorem,
A. K. Sen’s Social Welfare Function.


Advanced Macro Economics

to Employment Income and Interest Rate determination:

Ø  Classical,

Ø  Keynes
(IS)-LM) curve,

Ø  Neo-classical
synthesis and New classical,

Ø  Theories
of Interest Rate determination and Interest Rate Structure.


Money-Banking and Finance

Demand for and Supply of

Ø  Money
Multiplier Quantity Theory of Money (Fisher, Pique, and Friedman)

Ø  Keynes’s
Theory on Demand for Money,

Ø  Goals
and Instruments of Monetary Management in Closed and Open Economies.

Ø  The
relation between the Central Bank and the Treasury.

Ø  Proposal
for ceiling on the growth rate of money.


Public Finance and its
Role in Market Economy

Ø  In
stabilization of supply, allocation of resources and in distribution and

Ø  Sources
of Government revenue, forms of Taxes and Subsidies, their incidence and
effects. Limits to taxation, loans, crowding-out effects, and limits to

Ø  Public
expenditure and its effects.

International Economics

Old and New theories of International


Ø  Comparative advantage,

Ø  Terms of Trade and Offer

Ø  Product Cycle and
Strategic Trade Theories.

Ø  Trade as an engine of
growth and theories of underdevelopment in an open economy.


Forms of Protection:

Tariff and quota.

Balance of Payments
Adjustment: Alternative Approaches.

Ø  Price versus income,
income adjustments under fixed exchange rates.

Ø  Theories of Policy Mix.

Ø  Exchange rate adjustments
under capital mobility.

Ø  Floating Rates and their
Implications for Developing Countries: Currency Boards.

Ø  Trade Policy and
Developing Countries.

Ø  BOP, adjustments and
Policy Coordination in open economy macro-model.

Ø  Speculative attacks.

Ø  Trade Blocks and Monetary

Domestic Measures, Different Rounds of WTO talks.


Growth and Development

Theories of growth

Ø  Harrod’s model;

Ø  Lewis model of
development with surplus labour.

Ø  Balanced Unbalanced

Ø  Human Capitals and
Economic Growth.

Ø  Research and Development
and Economic Growth.


Process of Economic
Development of less developed countries

Ø  Myrdal and Kuzments on
economic development and structural change:

Ø  Role of Agriculture in
Economic Development of less developed countries.


Economic Development and
International Trade and Investment, Role of Multinationals.


Planning and Economic

Ø  Changing role of Markets
and Planning,

Ø  Private-Public


Welfare indicators and
measures of growth

Ø  Human Development

Ø  The basic needs approach.


Development and
Environmental Sustainability

Ø  Renewable and
Non-renewable Resources,

Ø  Environmental

Ø  Intergenerational equity


Optional Syllabus For Paper-2

The Pre-Liberalization Era 

Ø  Contribution
of Vakil, Gadgil and V.K.R.V. Rao.

Ø  Agricultrure
: Land Reforms and land tenure system, Green Revolution and capital formation
in agriculture.

Ø  Industry
Trends in composition and growth, Role of public and private sector, small
scale and cottage industries.

Ø  National
and Per capita income : Patterns, trends, aggregate and sectoral composition
and changes therein.

Ø  Broad
factors determining National Income and distribution, Measures of poverty,
Trends in poverty and inequality.


The Post-Liberalization Era 

New Economic Reform and

Agriculture and WTO, 

Food processing, 


Agricultural prices and public distribution system, 

Impact of public expenditure on agricultural growth.


New Economic Policy and

The strategy of industrialization, 



Role of foreign direct investment and multinationals.


New Economic Policy and

Intellectual property rights: 

Implications of TRIPS, TRIMS, GATS and new EXIM policy.


New Exchange Rate Regime:

Partial and full convertibility, 

Capital account convertibility.


New Economic Policy and
Public Finance: 

Fiscal Responsibility Act, 

the Twelfth Finance Commission and 

Fiscal Federalism and 

Fiscal Consolidation.


New Economic Policy and Monetary

Role of RBI under the new


From central Planning to indicative planning, 

Relation between planning and markets for growth and decentralized
planning : 

73rd and 74th Constitutional amendments.


New Economic Policy and

Employment and poverty, 

Rural wages, 

Employment Generation, 

Poverty alleviation schemes, 

New Rural, Employment Guarantee Scheme.


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