Guidance for Economics Optional in UPSC Mains

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.

Paper 1

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:
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.

Paper 2

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; 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:

  1. Solve past years, including relevant questions from IES exam.
  2. Study from books rather than coaching notes, especially for Paper 1.
  3. 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.
  4. Revise multiple times to ensure that the concepts are entrenched in your memory.
  5. Practice diagrams and have conceptual clarity.
  6. 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.
  7. 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.
  8. Join google group for econ preparation – a good forum to discuss doubts/ strategy etc. (

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.

1. Agriculture 1. WTO and Indian Agriculture (Dhar)

2. Industry

3. India and WTO3. India’s External Sector

4. BoP speech4. Exchange rate

5. Direct Taxes Code-(only summary), 5. Monetisation of fiscal deficit5. Primer on Goods and Services Tax (done)

6. Changing role of rbi, 6. CPI a lousy measure for monetary policy-making_ Pronab Sen, 6. Inflation expectations – rbi speech, 6. Monetary policy

8. Analyzing Poverty in India8. How to enhance growth? Speech 8. calories and poverty line8.Employment, 8. Turnaround_in_Indias_Employment_Story

9. Developing-country trade: O for a beaker full of the warm South | The Economist

Pre-independence era – 2nd and 3rd are my notes from undergraduate days

58 thoughts on “Guidance for Economics Optional in UPSC Mains”

  1. Hello, thanks a lot for sharing your strategy. Hearty Congratulations!!!! I have few doubts.
    1. How did you cover Sen’s social welfare fn? Can you kindly share your source or notes? Lot of us are not frm better institutes like DSE which teaches those things in class.
    2. How important are modern changes in macroeconomics say post keynesian or heterodox schools? Should we read them as well?
    3. Lastly please suggest a good source for Mathematical economics?

    1. Thanks Devika! I shall upload my notes soon – it is one pager doc and I am not cent percent sure if thats what upsc wants.
      I don’t think modern schools are important since they are not mentioned in the syllabus.
      Chiang is a good book for mathematical economics but I don’t think it is relevant for upsc.

  2. Hii Riju ji,many many congratulations to you..can you give a clearcut stepby step strategy for economics optionalfrom where to start …..And apart from books,which materials should be followed??and How is IGNOU materials for preparation of this optinal?And kindly give some ideas that how to tackle the mathematical portions of micro?pls.
    With regards

  3. Thanks alot mam. This clears lot of confusion about the subject. Did you take Anirban’s course coz i think in Game Theory 2, he taught us about welfare and mechanism design ? (Just curious)

  4. Hey Riju
    Could you please specify the titles of the books by both Uma Kapila and Musgrave, since a normal surfing on the internet is showing me multiple books on Indian Economy and Public Finance respectively by these authors. Also any idea if Musgrave is a good book to cover Public Finance part of IES exam as well. I never took Pulin Nayak’s course at DSE, so I am not aware of a good book in Public Finance (the one that covers most of the syllabus under UPSC – both IES and IAS).

    Also can you please share your writing strategy for both the Eco optional and GS part of UPSC exams ( as in while writing the answers did you restrict yourself strictly to the word limit even if a quality answer required more than the specified word limit).

    Thanks a lot !

    1. Sorry for late response, I think I missed your comment.
      I referred to Uma Kapila’ India’s economy since independence. You can buy its latest edition online.
      Musgrave is the one we referred in our UG course – you can get photocopy of it from DSE photocopy shop.
      Not aware of IES exam prep but as long as it covers the syllabus, it should be good.

  5. Hi Riju,

    Thanks very much for excellent suggestions. Thanks in anticipation for uploading paper II notes.
    Few questions -

    i. Remembering gdp growth, industry growth data – I have been trying for the past 1 year, just keep on forgetting. Did some tricks help you? Would be very nice if you share.

    ii. Also, If you be very nice if you can give answer writing tips for paper II. For eg. this year there was this question on employment pattern changes since 1991, I was not sure what to write there – sector wise?employment elasticity data?, informal formal sector? male-female?self employed,casual?

    ii. There have been some questions in the public finance paper which I did not get anywhere. eg – dalton model on sales tax, corporate tax burden sharing.


    1. 1. Remembering data is a bit difficult but if you know the trends, it shouldn’t be a problem. The story behind the data is more important – for eg. there was a period when public investment is agriculture was falling drastically and was being compensated by investment by private sector – how this impacted agriculture growth is important to know but not the precise figures. I tried to remember employment, growth and sector wise gdp proportion a week before the exam – that ways you know the latest figures and it is fresh in your memory.
      2. You have made a valid point, let me bring that up in the blog.
      3. I didn’t know answers of these either! Best to skip such questions.

  6. Thanks for the Notes Riju, Industry one is quite comprehensive, changing role of RBI – i got such a well written article for the first time, Also pre-Independence – i believe i need not read anything else.

    2 questions -
    i. Repeated question in exam – Advancement in poverty measurement and Amartya’s sen measure. What does upsc want here? – the world bank approach, calorie line, income line etc or squared poverty ratio, squared poverty ratio, hcr etc. Also sen’s poverty measures would be his 5 unfreedoms concept(question asked in 2013) or his poverty index ( a sen’s index exists and another sen-shorrocks index exists)

    ii. Q -Inflation not purely monetary phenomenon and therefore RBI’s limited role in curbing it. Present Indian Inflation is adaptive expectation based – Economists say that RBI’s role is to bring down expectations. I got that but in the long run Is it RBI’s failure? As contractionary monetary stance is not going to bring down food and fuel prices since supply side factors cause them alongwith fiscal side not co-operating. Please explain.

    1. The article on Changing role of RBI is from RBI’s website only.:)

      1. For poverty line qn, I would suggest you to write on Head Count Ratio, Poverty Gap, FGT, etc along with emphasis on drawbacks of each. Also mention HDI and its benefits. For Sen’s poverty measure, I was until now not aware of any specific index. But what you suggest makes sense so build up on that.

      2. Focus has to be on a. supply side bottlenecks, b. managing inflationary expecations (see my notes which has a brilliant write up by RBI on inflationary expectations). I do not think we can simplify the situation and say that it is RBI’s failure. But yes, RBI has limited policy options when inflation is due to supply side factors. However, contractionary monetary policy does absorb money from the economy leading to lesser money available for booming sectors such as real estate which as per RBI will decrease wages for the workers, thereby impacting their purchasing capacity and hence lower inflation. Read more about this on RBI’s website, they have very good analysis on monetary policy and its impact on inflation.

  7. Hey Riju! It would be great if you could shed some light on the importance of joining a test series for some answer writing practice (referring to Economics as an optional). Did you join any? Is there any worthy enough to join? If not,how did you do answer writing practice? How is Axiom’s or Kalinga’s test series ?

    1. None required. Just refer to good quality sources and prepare your notes for concepts that are scattered across books/ papers. You can practice questions from past years.

  8. Hi Riju, I completed my UG from Miranda House in 2013 and am currently in the second and final year of my M.Sc. at IGIDR. I am pretty confused about how to go about my prep for CSE since the coursework at IG doesnt allow me the time to prepare vigorously. I was thinking of applying to thinktanks like J-PAL and preparing for CSE simultaneously and then dropping a year or so. But I cannot figure anything out :( since I would like to stay in Delhi and prepare for a year and that might need some financing, so I also thought of taking up a corporate job, working for a year, saving up and then going to Delhi.

    Kindly help me out through your suggestions. Also, the question-pattern for UGC NET is not very similar to what we conventionally did in post grad- undergrad. Can you suggest a good book for at least the questions, so that one may look at the underlying concepts elsewhere and prepare?

    1. Bhavyaa, since you have done your PG from IGIDR, I am sure preparing for CSE optional would be cakewalk for you. As for GS papers, you can consider joining some postal coaching course which in my view should be sufficient. There is no need to move to Delhi and spend lakhs on coaching institutes.
      If you aim to get into civil services, it is better to prepare for UPSC right-away then take up any job.
      I didn’t get your question on UGC NET? I have listed out all the books I referred to on the blog.

  9. Hi Riji Bafna!
    Congrats……!I am from engineering background,I like economics a lot.But if i start preparation from micro basics(Elasticity of demand etc…)how far it will take to complete syllabus(you said 4-5 months)but i am starting from root basics.I am willing to give my first attempt in 2015.

    1. Elasticity of demand is a very preliminary concept – it is a 2min read from 11th class NCERT books. I cannot judge for yourself but for a person who is fairly confident in maths and has good comprehensive skills, 4-5 months is sufficient.

  10. When can expect a blog on the specific source list for GS 1 &3 as you have uploaded for GS 2?

  11. Hi ma’am. Congratulations and great going! I just had a small query. Do we need to study the appendices given at the back of the chapters of Salvatore?Also aren’t the case studiesbin Salvatore irrelevant for CSE prep? Your guidance will be much appreciated.

  12. hi!
    I am doing my economics(H) from hindu college.
    it is my first year and I want to know how to begin my preparation for CSEs ?

  13. I m in part 1 in BA economics honos,never studied eco earlier but i m dedicated learner and determined for guide me my subjects

  14. Hi ma’am,
    I have completed my post graduation in
    economics. I’ll be giving CSE in 2015. Even though Financial Markets
    and financial aspects are not exclusively mentioned in the syllabus
    for Economics, we are expected to have a working knowledge of
    financial aspects to understand the functioning of economy which may
    be tested in interview , right? I didnt have any courses on this in my
    graduation and PG. . Can you suggest some good books/sources/blogs for
    this area where we can pick up basic knowledge and move forward.
    Thank you.

  15. hi riju ..its biswajit…can u please give u r notes on micro economics if posible….i am going to appear next year bt i didnt get interlinking concep in micro rest part is fine

  16. hi Riju
    Thank you for these wonderful suggestions..
    Can u please tell the relevant chapters of Uma Kapila ,debraj Ray and dutt & Sundaram
    I’ll be giving the exam next year..

  17. Hi Riju..
    Is Ramesh Singh a good book to refer as suggested by many sources?
    Also, Uma Kapila: Performance and policies?

  18. Hi ma’am,
    I am an engineering background student. I am familiar with basics and taking economics as optional, thanks a lot for this blog, it will be very helpful in our preparation. Can u shed some light if it is there any non-eco or non-MBA background student scored good in CSE.

  19. Hello Ma’am,

    I am a CSE aspirant with Economics optional. I have done my masters from TERI University. My CGPA is low(6.5). I know it is too early to ask but will it be a problem during the interview ? How much weight do they give to ur marks. I took this year’s prelims without coaching. Could do well. Please guide.

  20. Hi all i want to know is how relevant is maths in upsc eco mains syllabus
    And i have studied mankiew it’s surprisingly not mentioned in your list is it going to be relevant in upsc mains because the macro eco concepts are very nicely explained
    Also enlighten me about how relevant would maths be in micro
    Please help

  21. Hi Riju Maam! I am pursuing my economics honors. I am taking coaching for GS and want to opt for economics optional. Should I go for coaching for the optional or can I study it on my own. Thank you!

  22. Hello Sir,
    I am a UPSC CSE aspirant and preparing to appear in 2016 exam. I have chosen economics as optional subject. I have engineering background, I have made self study of basic concepts of microeconomics and macroeconomics from past 5-6 months. Sir, can you please suggest me that whether this optional subject would be better for me or not as I am getting mixed reviews regarding the choice of my optional. If I choose this optional subject what should be my approach to study and how can I overcome difficulties.
    Thank You

  23. hi Mam,
    In International eco book of domnic salvatore ..topic “forms of protection: tariff and quota ”
    do i require to study all topics or culd u suggest me sub topics which i need to study ?
    bcze there is lot of topics need to cover under dis..

  24. Hi maam
    I am mechanical engineer and i am almost blank with economics 1 so what according to u shall start with to understand eco1 concepts.

  25. Hi Riju ji , I have completed my under graduation in (Bsc mathematics). and i am going to give CSE 2016 attempt, I have chosen economic as my optional. thank you so much for guiding us.
    i have tried to join our economic optional group through your respective link and i followed the steps for that atlast i got the line on display like your request is pending. please help me to join our economic optional group. or suggest the relevant link. thank you

  26. sir i had left maths in 10th standard still i want to take economics as the optional for the mains so which all chapters of maths do i need to study in order to prepare for economic in the mains of upsc…..moreover i thought of taking economics as i m from the commerce background and have been studying economics since 11th standard but i hardly know how much of maths would be required so if you could kindly help me

  27. Hi,

    I sent request for economics google group few days back and still hasn’t been approved. Whom should we contact regarding this?

  28. Hi ma’am ,

    I am very confused as to which models to prepare under the topic human capital and economic growth & research and development and economic growth. Could you please specify the models and clear my doubt. Also please mention the book from which these models are to be prepared.

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