Is economics pain or gain in mains exam??

Dear Friends,

Is economics really tough for non economics student? I think it has deliberately been made tough and one needs to make his/her concepts clear to get hold over it. Economics has become one of the most important areas in mains exam as well as in prelims. How to prepare for it??

One of the most important things is to first understand is the syllabus. Most of the candidates are not even aware about the syllabus of the economics paper. Economics is one area which is interrelated with other area e.g. Food Security Act is to solve the problem of hunger and malnutrition in the county, but it involves expenditure around 1lakh crore and here comes the role of economics.

Economics is an interrelated subject and hence be understood accordingly. Topics in GS paper 2 are related with first paper also e.g. any changes in world economy will have impact on domestic economy also like Greece crisis has an impact over the FDI inflows of the India. For ease of candidates, i have compiled the syllabus of economics alongwith important topics for upcoming mains exam and one should prepare the following chapters, make your concept clear and interrelate these concepts with the news coming in the newspaper.

Chapter -1:  Economic Growth and Development

·         Economic Growth Vs Economic Development

·         Indicators of Economic Growth- Real GDP and PCI

·         Indicators of Economic Development- PQLI and HDI.

·         HDI- Components, Measurement, HDI Value

·         Human Resource Development and Human Development

·         Human Development Report-2010 ( Very Important)

·         Millennium Development Goals

·         Capital Formation- Savings, Investment, ICOR, Vicious Circle of Poverty

·         Sustainable Development- Concept, Features, Indicators, Threats, Measures to promote SD (Very Important)

Chapter -2: Nature of the Indian Economy

·         Features of the Indian Economy

·   Inequalities-  Concept, Measurement, Lorenz Curve and Gini Coefficient, Causes and remedial measures

·    Poverty- Concept, Measurement, Poverty Line, Indicators, Trends, Causes and remedial measures, Committees on method of poverty calculation  ( Very Important)

·         Unemployment- Concept, Types, Measurement: UPS, CWS, CDS, Causes

·    Parallel Economy, Black Money and Money Laundering – Estimates, causes, remedial measures, suggestions. ( Very Important)

Chapter -3:  Human Resource and Developmental Issues

·       Population- Theory of Demographic Transition, Malthusian Theory, Population vs Economic Development, Census. 2001 & 2011( Very Important), Population Policy, 2000

·         Infrastructure-Features, Components: Energy, Transportation etc, Deficiencies, Govt. Policy.

·       Developmental Programmes (Very Important specially new schemes)- Poverty alleviation and employment generation programmes Social security schemes, Programmes for the empowerment women and children, Educational programmes, etc.

Chapter -4:  Monetary and financial System (Important Area)

·         Money Supply

·         High Powered Money

·         Minimum Reserve System

·         Reserve Bank of India

·         Monetary Policy

·         Nationalisation of banks

·         Narasimham Committee recommendations

·         Banking sector reforms

·         Basel Norms (Very Important specially Basel III)

·         Development Finance Institutions

·         Non Banking Financial Institutions

·         Money Market and Capital Market (Emerging area & Important)

·         Financial Inclusion: Microfinance ( Very Important)

Chapter -5:  Inflation

·         Inflation- Concept, Types, Causes, Impact, Trend etc.

·         Measurement of Inflation- Price Index Numbers

·         Measures to control inflation, Related Terms.

Chapter -6:  Global Financial Crises

·         Business Cycles

·         Sub-Prime Crisis

·         Great Depression of 1930s

·         European and American Debt Crisis ( Very Important)

·         US bills like Glass Steagal Act & Dodd Frank Act (Expected)

Chapter -7:  Taxation and Budget

·         Direct Taxes and Direct Tax Code ( Very Important)

·         MODVAT &CENVAT

·         VAT & GST (Very Important)

·         State-level VAT

·         Tax Reforms

·         Structure of the Budget

·         Budgetary Deficits

·         Public Debt

Chapter -8: Fiscal Issues

·         Fiscal Policy

·         Fiscal Responsibility and Budget Management Act, 2003

·         Distribution of taxes between centre and states

·         Finance Commission

·         Recommendations of the Thirteenth Finance Commission ( Very Important)

 Chapter -9:  Industry

·         Industrial Policy

·         New Industrial Policy, 1991

·         Industrial Performance

·         Public Sector

·         Disinvestment

·         Small Enterprise Sector

·         Industrial Sickness ( Important)

·         MSME (amended) Act (Important)

Chapter -10:  Agriculture (Do it from PD special Issue)

·         Significance

·         Land Reforms

·         Green Revolution, White Revolution, Yellow Revolution etc.

·         Agricultural Credit and Agricultural Insurance

·         Agricultural Marketing and Commodities Markets

·         Agricultural Price Policy

·         Public Distribution. System (Important)

·         National Agricultural Policy, 2000 and Agricultural reforms

·         National Food Security Bill, 2011 (Very Important)

Chapter -11:   Economic Planning and Economic Reforms

·         Types of Planning

·         Features of Indian Planning

·         Ideas on planning before Independence

·         Planning in India

·         Planning Commission and National Development Council

·         Goals of Planning

·         Review of Planning

·         Eleventh Five Year Plan( Important)

·         Draft 12^th Five Year Plan( Important)

·         Economic Reforms

·         First Generation Reforms

·         Second Generation Reforms

·         Assessment of reforms

Chapter -12:   Balance of Payments (Imp)

·         Balance of Payments- Concept, structure, Terms, Indicators of BoP, Causes of deterioration, Measures to improve BoP situation, BoP trends, Current data and BoP  situation.

·       Foreign Exchange Rate Systems- Types, Forex Market and Determination of exchange rate, Factors affecting demand and supply of currencies, Exchange rate system and policy in India and PPP exchange rate.

·      Devaluation, Revaluation, Appreciation, depreciation- advantages and disadvantages, causes and policy of RBI.

·       Foreign Exchange Reserves- composition, trends, criteria of adequacy, pros and cons of high forex reserves.

Chapter -13:  Foreign Trade and Investment

·         Foreign Capital- (a) Debt Capital: ECBs, NRI Deposits, Bilateral and Multilateral Borrowings, their pros and cons, trends, etc. (b) Equity Capital: Foreign Investment- 1. Foreign Direct Investment- components, pros and cons, trends, FDI policy. 2. Portfolio Investment- Hot Money, Tobin Tax, FIIs, Euro-Issues- GDR, ADR, FCCB, FCEB, etc. Current trend and  policy.  

·    Multinational Corporations- Features, advantages and disadvantages for host countries, MNCs in India and Indian MNCs, Policy.

·     External Debt – Sources, indebtedness, debt-GDP ratio, debt service ratio, international comparison.

·    Foreign trade- Composition, Direction, Trends, Trade in Services, Trade Policy- types, Liberalisation of trade policy,  Foreign Trade Policy 2009-14.

·      Export Promotion schemes: DEPB, EPCG, EOUs, Replenishment Licences etc. and SEZ- introduction, SEZ Act 2005, objectives, contentious issues, Approval Committee, Recommendations of GoM, current situation and policy.                             

·    Globalization – Meaning, indicators, advantages and disadvantages, impact on Indian economy and policy.

·         Energy Diplomacy ( V. Imp)

Chapter -14:  International Organisations ( V. Imp for second paper)

·         World Trade Organisation- GATT, objectives, functions, structure, agreements-TRIPs, TRIMs, GATS, NAMA, AoA etc, Ministerial Conferences- Doha and Geneva Conference, impact on India, Govt’s stand, contentious issues- Singapore issues, SSP, implementation issues, Role of G 20 etc, impact on India.

·         Britton Woods Twins: International Monetary Fund- Establishment, objectives, Quota, Lending Facilities, SDRs, India and IMF, Suggested reforms and G 20.

·         World Bank Group: IBRD- Establishment, objectives, Quota, Lending,  India and IBRD, Suggested reforms and G 20., IDA, IFC, ICSID and MIGA.

·         Regional Trade Agreements- FTA, PTA, CU, CM, EU, Pros and Cons, Current Policy, SAFTA, FTA with ASEAN, South-South Cooperation, RTAs Vs WTO, India’s Approach.

Chapter -15:  Service Sector (V. Imp)

·         Service Sector: Concept, Contribution in Indian GDP, Challenges & new areas of growth.

Suggested Reading:

• Mishra and Puri - This book is a big compilation with lots of unnecessary facts. Do not read the book from end to end. You should be able to get clarity out of every topic. So, first scan through the topic and the side headings. Then question logically in various dimensions. Try to find the answers to the questions raised as you go through the material and prepare a logical structure, E.g. Unemployment - What is unemployment; types; extent and distribution; causes; impact; efforts to reduce; appraisal of policies; recent measures; suggestions.

• Economic Survey- It is a very useful document and must read for every candidate. Prepare notes from it. Also observe the graphs, which can be used as innovations in answers. While reading, note the terms, which can be asked for two markers. The box items are very important. One should read eco survey completely as it is an authentic source of information and it is a govt document so UPSC tends to select question from it. Do not try to cram the data rather use it for better understanding of economics like size of economy, how big external debt, fiscal deficit etc.

• NCERT book 11^th & 12^th for Concept Clarity.

• Pratiyogita Darpan special issue for selected topics only

As, I have previously suggested to the candidates to keep their material limited, please maintain the same for economics also. One important suggestion DO NOT read business newspaper as it contains very technical area like stock market news which is not relevant for UPSC student; rather business section of any good newspaper should be focused. The main aspect is to gain the basic understanding with clarity. So spend more time on logical thinking and inter-relating, rather than on various books or articles.

The most important area to be studied carefully in economics is next 4 months newspaper. Whatever comes in mains exam is because it was in news recently. So while preparing for above syllabus try to relate it with the news coming in the newspaper and try to see different dimension of every issue.

I think I have covered economics area in detail, however if you want to give some suggestion or improvement or want to ask any query, feel free to comment on it.

Regards,

Deepak Singla