For a UPSC CSE aspirant, the optional subject is also an important subject. In the UPSC mains exam, optional marks have two papers, Paper 1 and Paper 2. Each paper is of 250 marks which makes a total of 500 marks. The UPSC optional subject list contains 48 subjects in total, one of which is Economics.

  • The economics syllabus mainly focuses on the candidates’ ability to understand the basic concepts and application of knowledge to infrastructure planning and developmental challenges for sustainable development.
  • Candidates’ who have an undergraduate in economics or who work as economists, finance managers, trade compliance, and international trade professionals or bankers can take up this optional.

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SYLLABUS FOR PAPER I

  • Advanced Micro Economics:
    • Marshallian and Varrasiam Approach to Price determination.
    • Alternative Distribution Theories: Ricardo, Kaldor, Kaleeki
    • Markets Structure: Monopolistic Competition, Duopoly, Oligopoly.
    • Modern Welfare Criteria: Pareto Hicks & Scitovsky, Arrow’s Impossibility Theorem, A.K. Sen’sSocial Welfare Function.
  • 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.
  • Money – Banking and Finance:
    • 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 MonetaryManagement in Closed and Open Economies. The relation between the Central Bank and the Treasury.Proposal for the ceiling on the growth rate of money.
    • 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.
  • International Economics:
    • 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 under development in an open economy.
    • Forms of Protection: Tariff and quota.
    • 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, DifferentRounds of WTO talks.
  • Growth and Development:
    • (a)
    • (i) Theories of growth: Harrod’s model,
    • (ii) Lewis model of development with surplus labor
    • (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: the changing role of Markets and Planning, PrivatePublicPartnership
    • (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.

SYLLABUS FOR PAPER II

  • Indian Economy in Pre Independence Era:
    • Land System and its changes.
    • Manufacture and Transport: Cotton, Jute, Railways, Credit, and Money.
    • Commercialization of agriculture, Laissez-faire theory, Drain theory, and critique.
  • Indian Economy after Independence:
    • A. The Pre Liberalization Era:
    • Vakil, V.K.R.V. Rao, and Gadgil: Contribution.
    • Agriculture: Land tenure system and Land reforms, capital formation in agriculture, and the Green Revolution.
    • Industry Trends in growth and composition, Role of the public and private sector, small scale, and cottage industries.
    • Patterns, trends, aggregate, and Sectoral composition and changes: National and Per capita income.
    • Broad factors determining National Income and distribution, Trends in poverty, Measures of poverty, and inequality.
    • B. The Post Liberalization Era:
    • New Economic Reform and Agriculture: Agriculture and WTO, Agricultural public distribution system and prices, Impact of public expenditure on agricultural growth, Food processing subsidies.
    • New Economic Policy and Industry: Privatization, Strategy of industrialization, Disinvestments, Role of foreign direct investment, and multinationals.
    • New Economic Policy and Trade: Intellectual property rights: Implications of TRIPS, GATS, TRIMS, and new EXIM policy.
    • New Exchange Rate Regime: Full and partial convertibility, Capital account convertibility.
    • New Economic Policy and Public Finance: Twelfth Finance Commission and Fiscal Federalism, Fiscal Responsibility Act, and Fiscal Consolidation.
    • New Economic Policy and Monetary system. Role of RBI under the new regime.
    • Planning: 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: Employment and poverty, Employment Generation, Rural wages, New Rural Employment Guarantee Scheme, Poverty alleviation schemes.
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