UPSC - Economics Optional - Syllabus, Strategy, Books & Notes

Economics is what every country, irrespective of their socio-political scenario, is based on. To be a civil servant, knowing the basic concepts and theories of economics, the nuances of Indian economics and where it stands in respect to the economics of the world is very important. Thus Economics is an essential optional subject in UPSC mains that the aspirants can opt for. Although not as popular as Public Administration or Geography, Economics Optional has a good success rate among top AIR holders. Gaurav Agarwal, a top-ranker in 2013, had Economics as his optional paper.

Who should take Economics Optional for UPSC Mains?

There is no such rule that only Economics graduates can take this subject as an optional. The syllabus of UPSC Economics Optional is such that an aspirant even without any prior academic experience with the subject can go for it and score well. However, before choosing Economics, the candidates must be sure that they actually like the subject and should not go for it only because they heard that it was easy to study and score or because the topper of the previous year had Economics as his or her optional.

If an aspirant is from Economics background and has a strong foothold on the subject, he or she should absolutely go for it. But in case a candidate is from a different field and finds Economics an interesting subject that they can understand and explore, then they should take a week or two studying the basics of Economics. If it is something they think they can take an interest in, prepare over the months and take the examination, then there is no reason for not choosing Economics Optional for UPSC.

Economics Optional Syllabus for UPSC Mains

Syllabus plays a very important role in Economics Optional for IAS, because more often than not, many questions come directly from the phrases used in the syllabus by the Civil Services Website. Here is the complete UPSC Economics Optional Syllabus for the candidates to refer to.

Paper I

1 Advanced Micro-Economics:

(a) Marshallian and Walrasian Approaches to Price Determination.

(b) Alternative Distribution Theories: Ricardo, Kaldor, Kaleeki.

(c) Markets Structure: Monopolistic Competition, Duopoly, Oligopoly.

(d) Modern Welfare Criteria: Pareto Hicks & Scitovsky, Arrow's Impossibility Theorem, A.K. Sen's Social Welfare Function.

2 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.

3 Money - Banking and Finance:

(a) Demand for and Supply of Money: Money Multiplier Quantity Theory of Money (Fisher, Pique and Friedman) and Keynes’s Theory on Demand for Money, Goals and Instruments of Monetary Management in Closed and Open Economies; Relation between Central Bank and the Treasury; Proposal for a ceiling on the growth rate of money.

(b) 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.

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 under development in an open economy.

(b) Forms of Protection: Tariff and Quota.

(c) 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, Different Rounds of WTO talks.

5 Growth and Development:

(a) Theories of Growth:

(i) Harrod's Model

(ii) Lewis Model of Development with Surplus Labour

(iii) Balanced and Unbalanced Growth

(iv) Human Capital and Economic Growth

(v) Research & Development and Economic Growth

(b) Process of Economic Development of Less-developed Countries: Myrdal and Kuzments on economic development and structural change

(i) Role of Agriculture in Economics

(ii) 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.

Paper II

  1. Indian Economy in Pre-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.
  2. Indian Economy after Independence:
  1. The Pre Liberalization Era:
  1. Contribution of Vakil, Gadgil and V.K.R.V. Rao.
  2. Agriculture: Land Reforms and Land Tenure System, Green Revolution and Capital Formation in Agriculture.
  3. Industry Trends in composition and growth, Role of Public and Private sector, Small-Scale and cottage industries.
  4. National and Per Capita Income: Patterns, Trends, Aggregate and Sectoral Composition and changes therein.
  5. Broad factors determining National Income and distribution, Measures of poverty, Trends in poverty and inequality.

     B. The Post Liberalization Era:

  1. New Economic Reform and Agriculture: Agriculture and WTO, Food Processing, Subsidies, Agricultural Prices and Public Distribution System, Impact of Public Expenditure on agricultural growth.
  2. New Economic Policy and Industry: Strategy of Industrialization, Privatization, Disinvestments, Role of Foreign Direct Investment and Multinationals.
  3. New Economic Policy and Trade: Intellectual Property Rights: Implications of TRIPS, TRIMS, GATS and new EXIM policy.
  4. New Exchange Rate Regime: Partial and Full Convertibility, Capital Account Convertibility.
  5. New Economic Policy and Public Finance: Fiscal Responsibility Act, Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation.
  6. New Economic Policy and Monetary System. Role of RBI under the new regime.
  7. Planning: From Central Planning to Indicative Planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments.
  8. New Economic Policy and Employment: Employment and Poverty, Rural Wages, Employment Generation, Poverty Alleviation Schemes, New Rural Employment Guarantee Scheme.

Pros and Cons of Economics Optional

No UPSC Optional paper is smooth and easy to prepare for. Regardless of the educational background, a lot of work needs to go into the complete preparation of an optional paper. Economics Optional has its fair share of advantages and disadvantages as well, which are listed below.

Pros of Economic Optional

  1. The subject is based on rational, practical and logical ideas and concepts, which are comparatively easier to grasp than abstract ones.
  2. Though not the most popular optional paper on the block, Economics is a fairly scoring paper.
  3. Economics Optional significantly overlap General Studies paper III as it covers around 60% of it.
  4. The paper also covers around 30 marks in the UPSC Prelims paper as well, so it is like killing multiple birds with one stone.
  5. Economics Optional books and study materials are available in plenty.
  6. Because of the numerical problems and graph equations, making the paper more accurate and to the point and consequently impressing the examiner is easier than other papers.

Cons of Economics Optional

  1. Unless someone has a real love and understanding of the subject, it can be hard to pursue. Someone without an academic qualification in Economics can always choose the subject as an optional, but not someone who is disinterested in it.
  2. Some candidates find Economics too dry for their choice, especially students from Science background.
  3. Economics requires the candidates to be fairly decent in graphical equations. Graphs and charts are an intrinsic part of Economics, which is not the case with other papers like Public Administration or Sociology.
  4. There are no ways of avoiding numbers either, for those who are not very comfortable with mathematics. Although UPSC Economics optional does not have any separate numerical section, an understanding of it is certainly necessary.
  5. The answers of Economics can under no circumstance be vague or generic. They are almost always technical and precise, which can be a problem sometimes.
Economics Optional Courses for UPSC

Preparation Strategy for Economics Optional

Every candidate should have their own individual strategy of studying that they are most comfortable with. Here is an Economics Optional Strategy to provide them with a basic framework to start with.

Method of Studying Economics Optional

Step 1:

The first step of studying Economics is to simply read and understand. While reading a segment, candidates must try and internalize it and have a complete visual image of what is being told. This stage is not about memorizing the whole syllabus or being able to write complete answers, but only to allow the mind to understand the basic concepts.

Step 2:

This is the stage when the memorizing starts. Once the candidates have gone through the whole syllabus once, the second reading is about making notes and slowly trying to retain the theories and concepts that are being taught in the books. In this step, IAS aspirants should have the complete framework of the UPSC Economics Optional syllabus in their mind with all the topics relevantly interlinked. This is because the questions of Economics are not exactly direct. The candidates will be expected to apply the correct theorem or model out of their own merit. So only studying and memorizing the theories will not be enough, but they must also know their respective practical applications.

Step 3:

In this final step, candidates will finally start practising to reproduce the answers on paper. The first few times will have errors and glitches, but there is no need to feel discouraged or disheartened. Economics answers are heavily technical and precise, so aspirants should always allow themselves the necessary time needed to memorize it all instead of rushing. After writing them 3-4 times and rereading them, the answers will start getting imprinted in the mind. Candidates should always seek to include real or hypothetical examples and illustrations in their answers.

Preparation Strategy

  1. Solving question papers of at least the last five years (links to which are provided below) and trying to perfect the answers as much as possible. Attention must be given to frequently repeated questions.
  2. Practising the drawings over and over again so that it stays in mind in the examination hall.
  3. Refer to reputed Economics Optional notes for UPSC and other sources like newspapers and Economic and Political Weekly (EPW) for additional studying.
  4. Memorizing the keywords and technical terms. They are very important in Economics, and they enrich an answer, setting it apart from other generic answers.
  5. There is no alternative to regular revision.

Answer Writing Tips for Economics Optional

Answer-writings is a very personal skill, and unless someone is mugging up from the books and the notes, everyone should ideally have their unique answer to the questions. However, there are certain points which are more of a suggestion than a rule that IAS toppers with Economics Optional usually follow for the subject.

  1. Candidates should really focus on the use of graphs in Economics Optional. An illustration makes the answer a hundred times more appealable to the examiner when it comes to economics. Moreover, drawing the diagram first actually makes it a lot easier to write the text explaining the graph. Making the drawings neat and precise along with proper labelling is of utmost importance.
  2. Sticking to the economic vocabulary and using terms appropriately is a very important aspect. There are words which cannot be interchanged for its synonyms. Otherwise, the answer would seem generic and the examiner will start questioning the candidate’s abilities.
  3. Candidates should always go for graphs instead of mathematical equations when there is a scope for both. UPSC examiners prefer to see the former than the latter.
  4. When writing an answer in Economics, IAS aspirant should focus on the keywords and not divert from it. From the very first line, an answer is to be heading towards the core aspect of a question and not beat around the bush.
  5. Usage of examples is just as important as graphs and diagrams. Economics is as dynamic a subject as one gets and examples of current events, relevant news and important case studies provide an answer that extra edge over others. And the best thing about preparing for this is that candidates do not even need to study separately. All they have to do is follow the news on a daily basis and connect the dots with their UPSC syllabus, and use the same in the examination.

Importance of Diagrams in Economic Optional

When it comes to Economics, diagrams are a very important part of the whole syllabus. All Economics Optional notes and books comprise extensive and elaborate illustrations because without them Economics is only a half-baked subject.

UPSC Economics is completely based on charts, graphs and diagrams. There is a model illustration for every theorem and concept, and they are quintessential not only for understanding but also for scoring. Answers with diagrams in them inevitably leave a better impression on the examiner and secure a higher score.

When studying for Economics Optional, aspirants should always refer to the diagrams in the books for Economics Optional UPSC and make it a habit to draw them whenever there is a scope in the answer to providing one.

Suggested Books for Economics Optional

The choice of books is always an important part of preparing for UPSC. There is not one perfect book for everyone. Candidates must pick and choose depending on which book suits their studying styles the most. However, there are some books for Economics Optional which have been preferred by toppers over the years.

Here is a summarised list of UPSC Economics Optional Books for the candidates to study from. Students can also refer to EPW, which is a weekly peer-reviewed academic journal covering all aspects of social science.

Paper I

Name of the Book

Name of the Author

Advanced Microeconomics Theory

H. L. Ahuja


H. L. Ahuja

Modern Macroeconomics

Snowden and Vane

Public Finance in Theory and Practice

Musgrave and Musgrave

Public Finance

HL Bhatia

International Economics: Trade and Finance

Dominick Salvatore

Economics of Development

A. P. Thirlwall


Paper II

Name of the Book

Name of the Author

Indian Economy since Independence

Uma Kapila

Indian Economy

Mishra and Puri

Indian Economy – Performance and Policies

Uma Kapila

Indian Economy

Sanjeev Varma

March of the Indian Economy

I. C. Dhingra

India Year Book PDF


Indian Economy

Ramesh Singh

Previous Years Question Papers for Economics Optional

Many toppers suggest consulting previous years question papers before starting to study to have an idea of how to approach the subject and what type of questions the candidates have to answer. Many top rankers also suggest doing it after reading the IAS Economics Optional books. Nevertheless, going through the previous years papers is an important part of Economics Optional preparation.

Here are the question papers of Economics Optional for the previous five years, from the year 2014 to 2018.


Question Papers


Paper I

Paper II


Paper I

Paper II


Paper I

Paper II


Paper I

Paper II


Paper I

Paper II

Details about coaching for Economics Optional

The Economics Optional paper is one of those papers which can be attempted in a better manner if aspirants and students focus on attending coaching classes to know more.

Key features to look for

  • If a student wants coaching classes, then they need to prepare as such. One such way to do this is to ensure that the institution the student will be attending takes a sufficient amount of mock tests. Mock tests better prepare the students for the coming exams, and they are essential.
  • Talking to other former and current students of the institution in question on social platforms and forums is also an efficient way to dismiss any confusion a person may have regarding a situation. They also get to know the quality of the faculty and the sort of notes which they can expect from an institution.
  • Looking through the profiles of the faculty is essential to ensure the best experience. This way the student knows what sort of teachers they can expect from the institution.
  • One of the chief things to look for when searching for coaching classes is one which is known for completing the syllabus in time, and also going through the entire syllabus to help the student to better prepare for the exams.
  • The success rate of an institution is critical as it gives students a sense of what sort of level the institute performs at.

Ideal Course Format

The course format for any syllabus differs with each person, as all individuals can approach it according to their unique study methods. The features which a course format for Economic Optional paper, a class needs to have, includes:

Duration: The candidate needs at minimum a period of 10 to 12 months to complete the course in a proper manner. There is no way in which the syllabus can be completed properly in a time which is less than this.

Tests: A critical part of the preparation, the Mock Test is one of the most used ways to measure how well-prepared the candidates are to sit for the examination. There must be at least 1 or 2 such exams per month, following the completion of a segment while the frequency of the tests should increase with the completion of the syllabus.

Study material: An important duty of the coaching centre is to make sure that the students get the notes for the subject which are easy to understand and of good quality. They should cover each topic and include proper analytical case studies as well with regards to the Economic Optional Paper.

Find coaching for Economic Optional Paper in Delhi

There are numerous coaching centres for IAS aspirants which have opened across the country. But when it comes to the Northern Zone of India, Delhi has become one of the best locations for these centres. As the number of people candidates who are looking to prepare for IAS examinations increases, the coaching centres have grown and advanced as well, covering the Economic Optional paper properly.

Economics Optional coaching classes have sprung up throughout Delhi, attracting students from all over to the city to prepare for IAS. Students from nearby cities and rural areas also arrive at the city to prepare for the IAS exams.

Economics Teachers Associated with NeoStencil

Bijendra Kumar Singh Sir

The Director of Eco Vision IAS, Mr Bijendra Kumar Singh is a Post Graduate in Economics and holds an MBA in Finance and has been associated with reputed coaching institutes in and around Delhi for over six years now.

    Talk to us for

    UPSC preparation support!


Do you want to become an IAS officer like Saumya Sharma?
Study Online at  Neostencil Logo

Your Exam segments is being saved. Please wait....

Select Exam(s) you are interested in

please enter valid OTP