Note: Please scroll to the bottom of this article to download my notes for Economics Paper 2.
Why this optional?
Since last two-three years, UPSC seems to be awarding economics well and it is no longer considered to be a ‘low-scoring’ optional. The subject is technical in comparison to the other mainstream optionals but is equally (or rather more?) relevant in current times. All said and done, the input output ratio of this optional is positively correlated and it is unlikely that if you have done the paper well that you will get low marks.
Who should go for this optional?
I would strongly recommend students who have studied economics at graduation and/or post-graduation level to consider it as an optional for this exam. The level of questions is equivalent to BA Economics (Honours) course. Management students shall also not find it too difficult if they are interested in the subject and have studied basic Economics as part of their curriculum. Students from engineering background can also consider Economics as an optional but their learning curve might not be steep.
While Economics’ students can complete UPSC Econ syllabus in less than two 2 months, engineers may require about 4-5 months to understand and appreciate the subject. This time span varies across individuals and is primarily dependent on your interest and grasp of concepts. Economics is a bit mathematical so if you have been out of touch of mathematics since +2, this may not be the ideal optional for you.
Availability of material is a concern for this subject. While I didn’t attend any coaching, none is considered to be good enough to guide you for this optional. One should be prepared for self-study, primarily through multiple books and Internet for this optional.
Books to refer
Here I am listing material I referred to for this subject. This is by no means the only source and one needs to figure out what works for them and plan out accordingly.
Topic 1: Advanced Micro Economics
|Marshallian and Walrasian Approaches to Price determination||Link - good to understand the concept, mathematical details need not be emphasised|
|Alternative Distribution Theories: Ricardo, Kaldor, Kalecki||Advanced Economic Theory by Ahuja (only about 30-40 pages of the heavy book)|
|Markets Structure: Monopolistic Competition, Duopoly, Oligopoly||Pindyck and Rubenfield|
|Modern Welfare Criteria: Pareto Hicks & Scitovsky, Arrow’s Impossibility Theorem, A.K. Sen’s Social Welfare Function||Advanced Economic Theory by Ahuja (again,very few pages of the book). Understanding Sen’s Social Welfare Function is a bit tricky but I referred to what was taught at my PG course at DSE.|
Topic 2: Advanced Macro Economics
Macroeconomics by Froyen is a wonderful source for this section. However, one might find it a bit wordy and hence confusing. To bridge this gap, one can refer to Economics for UGC NET by Ramesh Publications. This book is not good to built concepts but has certain topics in a very precise format and some of these have also been asked by UPSC in the past.
Topic 3: Money – Banking and Finance
|Banking||Froyen and the UGC NET book mentioned above are good source for this section. For theories on demand for money, I referred to this link: http://www.oswego.edu/~edunne/340chapter21.html|
|Public Finance||Public Finance by Musgrave|
Topic 4: International Economics
International Economics by Salvatore is a bible for this section. Ideally, this should be read cover-to-cover to build overall conceptual clarity but certain topics not in the syllabus can be left at the end. I had studied this subject as part of my graduation from Paul Krugman’s IE. That’s also a good book but UPSC seems to hand pick topics directly from Salvatore in the exam and its syllabus is also organized as per the contents of this book. It is preferable to stay with one book as the approach of the two is a bit different.
Topic 5: Growth and Development
|Theories of growth||Development Economics by Debraj Ray (for Harrod’s model, Lewis model, human capital and economic growth) and Thirlwall (Balanced and Unbalanced growth, human capital and economic growth and research and development and economic growth)|
|Process of Economic Development of Less developed countries: Myrdal and Kuznets on economic development and structural change: Role of Agriculture in Economic Development of less developed countries.||Thirlwall|
|Economic development and International Trade and Investment, Role of Multinationals.||Salvatore/ Debraj Ray|
|Planning and Economic Development: changing role of Markets and Planning, Private- Public Partnership||Uma Kapila (this is a bit abstract topic – as long as you have studied it as part of General Studies, its fine)|
|Welfare indicators and measures of growth – Human Development Indices. The basic needs approach.||Internet plus Thirlwall|
|Development and Environmental Sustainability – Renewable and Non Renewable Resources, Environmental Degradation, Intergenerational equity development.||Thirlwall|
I had also referred to the UGC NET book mentioned above for this section since it was precise and easy to revise just before the exam.
In 2013 Mains, Paper 1 wasn’t as straight forward as previous years. A number of questions were model-based and seemed non-doable while writing the exam. While I think this was more of an exception than indicating any trend for questions in future, it will still be a good idea to focus a bit more on mathematical side of the concepts. In any case, it is fine to leave 10-20 marks worth of questions if they seem to be entirely un-doable.
This paper has some semblance with General Studies but requires greater in-depth study. The syllabus has two components:
- Indian Economy in Pre-independence Era – Since I had studied this topic at UG level, I referred to my notes and various readings in the course.
- Indian Economy after Independence – The Pre Liberalization story is dealt well in Uma Kapila and one can refer to Internet for more references. Remnant topics can be covered from Dutt and Sundaram – it is not a great book but is useful for topics that are not covered elsewhere. For Post Liberation Era, one can refer to the following sources: (1) Latest Economic Survey; (2) Uma Kapila; (3) Speeches by RBI Governor/ Dy. Governors on relevant topics (available on rbi.org.in); and (4) Newspaper articles – One should regularly follow a business/ economics newspaper (I prefer Business Standard). Editorials of Mint newspaper should also be followed. Another brilliant source is of course The Economist magazine whose articles are regularly published in The Indian Express. EPW also has excellent articles on macro-economic trends – do search for them on their website (no need to take regular subscription, just get the ones that are relevant).
One should rely extensively on Internet to understand and prepare notes on topics in this section.
Making notes is a must since the topics are vast and sources multiple. I had also referred to Neeraj Singh’s notes (Rank 11, CSE 2011) for certain sections. I shall upload my notes soon for everybody’s reference – these might be a bit dated for this year’s exam but hopefully should be useful. I would encourage readers to check Gaurav Aggarwal’s blog for guidance in this paper as he scored a majestic 162/250.
Certain dos for the exam:
- Solve past years, including relevant questions from IES exam.
- Study from books rather than coaching notes, especially for Paper 1.
- Make notes so that it is easier to study before the exam within a day – I did this only for Paper 2 as I was confident and clear on topics in Paper 1.
- Revise multiple times to ensure that the concepts are entrenched in your memory.
- Practice diagrams and have conceptual clarity.
- Have one source for one topic so that revision at the end is organized. It is also good to flag in the syllabus the source for each topic as every topic has multiple sources for its sub-topic.
- Before writing down the answers, spend 5min in planning which questions you would want to answer. Given the answers are to be written in a booklet, attempting the ones you know well first shall be a good strategy.
- Join google group for econ preparation – a good forum to discuss doubts/ strategy etc. (email@example.com)
Guidance on writing answers
For Paper 1, focus should be on correctly outlaying the answer in a precise manner without any concern about word limit – that is, there is no need to unnecessarily stretch an answer to fit in the word limit. I preferred writing in a mix of points and paragraphs with entire emphasis on conveying to the examiner that I knew the answer. Wherever possible, use diagrams – these should be properly labelled and axis correctly named. Answering a question also becomes easier with diagrams. Problem-solving questions can earn high marks so make sure that you have all the steps correct and final answer fits in the model. I was not used to solving market-related problems for UPSC and had spent a good 10min in correcting my silly mistakes! Thus, be prepared for all types of questions and do not loose your patience while attempting them in the exam.
For Paper 2, my answers were organised in the form of introduction, main body in points and conclusion. Again, I was not too concerned about the word limit as such but the quality of the answer was my key concern. The answer should have a central theme and direction and should not look abstract – it should answer the question asked in the exam and not what you have prepared during your preparation. Also try connecting Paper 1 concepts wherever possible. Being broad-minded and incorporating what you have studied as part of General Studies shall also be helpful.
Please click on each of the link below to download the file. Note that all these are arranged topic-wise, as per UPSC syllabus.
Pre-independence era – 2nd and 3rd are my notes from undergraduate days