Economics Optional

Economics Optional

  1. How to prepare economics optional?

The optional subject plays a major role in overall score of the candidate. Choosing the right optional subject is necessary. Economics is one of the most interesting subject and best optional subject. It is most scoring optional subject. Many toppers have opted for economics in last many years.Economics is a technical subject and equally relevant in contemporary times. The success rate in the subject is high which encourages the candidates to opt for it.
Candidates with a background in economics are likely to score more since they are more familiar with the concepts and have more clarity of the topics. Thus it is an added advantage for economic students. They tend to take less time in covering the syllabus in a short span of time.

The students who are novice in the subject can opt for economics optional but it will take more time for them to complete the syllabus since they are unfamiliar with the concepts of the syllabus. The time varies and is different for individuals. But a non economic student needs to put a lot of efforts in order to understand the concepts and have a proper understanding of the syllabus.

Given below are different strategies which can be used during preparation:

  1. Economics optional is more of a logical subject. So it doesn’t require rote memorization like other subjects of humanities. Therefore to score good marks you need to understand the concepts and fundamentals of economics. Apply concepts in the questions asked in the exams. Most of the questions require to be answered by giving a precise answer instead long stories or writing unnecessary stuff. Thus make sure you write to the point and be concise while answering. It is technical subject and differs from mainstream optional subjects so don’t use the strategies used in other subjects.
  2. It covers most of the portion of the General studies paper 3. The half of the syllabus is covered by it. Thus it acts as a dual benefit and is an added advantage. Also it covers around 25 to 30 marks in general studies paper 1 of UPCS prelims. Thus choosing economics optional offers many benefits. While preparing for economics optional you simultaneously prepare for others papers also. Thus if you have prepared economics during UPSC prelims it will also be helpful for the mains exam as well.
  3. Study material is easily available for the economics optional. This helps in preparing well since a student can refer to various available reference books. Variety of books helps in making concepts more clear. If your concepts are not clear from one book you can easily refer to another and get proper understanding of the topic. Also availability of enough study material helps to prepare well but be specific while choosing the reference books as many times students have different books which confuses them as from which one to study.
  4. It becomes tough for non economics background students to cover the entire syllabus properly since they don’t have prior understanding of the topics. For them the best way to prepare is to practice the concepts covered under the topic. Keep on practicing the graphs and other necessary diagrams regularly. Consistency is the key to score well. Since this will help you to become familiar with the syllabus. If you are good at mathematics then it becomes easier to prepare and one have better chances of scoring well. Thus have a good hold over mathematics concepts which will ultimately help in scoring well in economics optional.
  5.  Next strategy is to finish the syllabus before a month or week before the final exam. Clear all your concepts and understand everything by reading the study material again and again. Once you are done with the syllabus make a study plan and revise the syllabus on a regular basis in a systematic manner. By revision you will gain confidence and better clarity of all topics. Also you will be able to identify as which are the topics at which you have proper understanding and others at which you are not so good. Accordingly you can work upon your strong and weak areas of the syllabus.
  6. In addition to this you can solve mock test papers. They will help in time management. You can learn to solve the question paper in a limited time frame. Also it will help you to identify your mistake. Make sure to do an analysis of the answers of the mock test papers in order to know where you lacked and which all topics requires to be studied in depth. A good score in mock test papers will help to boost your confidence and you will be more energetic to perform well in the final exam. Also you will get a variety of questions to solve which will ultimately help you in the preparation.
  7. Another key aspect is notes making which includes making notes of the subject in a precise manner which can be used at the last moment. This will also help in doing a proper revision. Notes making also promotes answer writing practice in the candidates. Thus while writing answers in final exam becomes easier and helps to fetch more marks. Note making also helps to avoid last time stress or hassle. Since these notes can be referred anytime instead of referring to thick and fat books. They can be easily used to get a glimpse of the entire syllabus.
  8. Write the answers properly for every question. Before the final exam, write as many long answers as much possible. This will help you to present the answers in a better way during the mains exam. Also answer writing practice will be an added advantage for all subjects. Also use diagrams, illustrations and other relevant aspects of the answers. Focus on presenting the answer well so that examiner cannot deduct the marks in any part and give you good marks for the questions. This can be achieved by regular practice of answer writing.

UPSC ECONOMICS Optional Syllabus


 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. The relation between the Central Bank and the Treasury. Proposal for the ceiling on the growth rate of money. (b) Public Finance and its Role in Market Economy: In stabilisation of supply, allocative, of resources and 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 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 Unbalanced Growth. (iv) Human Capitals 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, Private-Public 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.


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) Agriculture: Land Reforms and land tenure system, Green Revolution and capital formation in agriculture. (iii) Industry Trends in composition and growth, Role of the public and private sector, small scale and cottage industries. (iv) National and Per capita income: Patterns, trends, aggregate and sectoral composition and changes therein. (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 agricultural growth. (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 indicative planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments. (viii) New Economic Policy and Employment: Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee Scheme.