What are the pros of choosing Economics Optional as a subject?

Some of the pros of choosing economics optional for UPSC Mains are: • It is a rational, analytical and logical subject. Hence, answers are objective in nature. • Due to the above reasons, it is highly scoring because answers are not left on interpretation. • It covers about 60% of the UPSC syllabus for GS paper -3. Hence, there is a significant overlap between this optional and core GS subject. • The books and other resource materials are easily available.

UPSC Economics Syllabus 2026: Booklist & Preparation Strategy

Q: What is the syllabus of economics optional?

There are two papers in economics optional. Paper I deals with advanced economic theory (microeconomics, macroeconomics, and international economics), while Paper II focuses on applied aspects such as the Indian economy, public finance, and banking.

By Vrinda Verma

Updated: November 7, 2025

13 min read
333

UPSC

Economics is one of the most popular optional subjects, especially among UPSC aspirants who have studied economics in their graduation. This subject has maintained a decent success rate in recent years, thereby attracting more and more students to opt for this subject. It also has a large overlap with the GS Papers syllabus, adding to its appeal. In this article, we’ve discussed the economics optional syllabus, preparation strategy, and the recommended booklist for covering the economics optional syllabus for the UPSC Mains Exam.

Table of Contents

Economics Syllabus For UPSC Mains

There are 2 papers in Economics in the UPSC Main Exam. Paper 1 tests topics of advanced economic theory- such as micro, macro, and international economics. Paper 2 tests more applied economics, such as the Indian economy, public finance, banking, etc. Listed below is the paper-wise syllabus of both Paper 1 and Paper 2 of the UPSC Economics Optional.

Economics Optional Syllabus For Paper 1

Here’s an overview of the economics optional syllabus for Paper 1.

Economics Optional Syllabus For Paper-1
Advanced Microeconomics	Marshallian and Varrasiam Approach to Price Determination. Alternative Distribution Theories: Ricardo, Kaldor, Kaleeki. Market Structure: Monopolistic Competition, Duopoly, Oligopoly. Modern Welfare Criteria: Pareto Hicks and Scitovsky, Arrow’s Impossibility Theorem, A. K. Sen’s Social Welfare Function.
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.
Money-Banking and Finance	Demand for and Supply of Money	Money Multiplier Quantity Theory of Money (Fisher, Pique, and Friedman) Keynes 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 ceiling on the growth rate of money.
	Public Finance and its Role in Market Economy	In stabilization of supply, allocation of resources and in 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.
International Economics	Old and New theories of International Trade.	Comparative advantage, Terms of Trade and Offer Curve. Product Cycle and Strategic Trade Theories. Trade as an engine of growth and theories of underdevelopment in an open economy.
	Forms of Protection:	Tariff and quota.
	Balance of Payments Adjustment: Alternative Approaches.	Price versus income, income adjustments under fixed exchange rates. Theories of Policy Mix. Exchange rate adjustments under capital mobility. Floating Rates and their Implications for Developing Countries: Currency Boards. Trade Policy and Developing Countries. BOP, adjustments and Policy Coordination in open economy macro-model. Speculative attacks. Trade Blocks and Monetary Unions. WTO: TRIMS, TRIPS, Domestic Measures, Different Rounds of WTO talks.
Growth and Development	Theories of growth	Harrod’s model; Lewis model of development with surplus labour. Balanced Unbalanced Growth. Human Capitals and Economic Growth. Research and Development and Economic Growth.
	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.
	Economic Development and International Trade and Investment, Role of Multinationals.
	Planning and Economic Development	Changing role of Markets and Planning, Private-Public Partnership
	Welfare indicators and measures of growth	Human Development Indices. The basic needs approach.
	Development and Environmental Sustainability	Renewable and Non-renewable Resources, Environmental Degradation, Intergenerational equity development.

Economics Optional Syllabus For Paper-2

Following is the syllabus for Economics Optional Paper 2.

Economics Optional Syllabus For Paper-2
Indian Economy in Pre-Independence Era	Land Systems & its Changes, Commercialization of Agriculture Drain Theory, Laissez-Faire Theory & Critique. Manufacture & Transport: Jute, Cotton, Railways, Money & Credit.
The Pre-Liberalization Era	Contribution of Vakil, Gadgil and V.K.R.V. Rao. Agriculture : Land Reforms and land tenure system, Green Revolution and capital formation in agriculture. Industry Trends in composition and growth, Role of public and private sector, small scale and cottage industries. National and Per capita income : Patterns, trends, aggregate and sectoral composition and changes therein. Broad factors determining National Income and distribution, Measures of poverty, Trends in poverty and inequality.
The Post-Liberalization Era	New Economic Reform and Agriculture	Agriculture and WTO, Food processing, Subsidies, Agricultural prices and public distribution system, Impact of public expenditure on agricultural growth.
	New Economic Policy and Industry:	The strategy of industrialization, Privatization, Disinvestments, Role of foreign direct investment and multinationals.
	New Economic Policy and Trade:	Intellectual property rights: Implications of TRIPS, TRIMS, GATS and new EXIM policy.
	New Exchange Rate Regime:	Partial and full convertibility, Capital account convertibility.
	New Economic Policy and Public Finance:	Fiscal Responsibility Act, the Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation.
	New Economic Policy and Monetary System.	Role of RBI under the new regime.
	Planning	From central Planning to indicative planning, Relation between planning and markets for growth and decentralized planning : 73rd and 74th Constitutional amendments.
	New Economic Policy and Employment:	Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee Scheme.

How to prepare for Economics in UPSC Mains?

If you’re from an Economics background or have studied economics in your graduation, then you can start studying from the standard books and focus on advanced concepts right away. However, if you’re new to this discipline, then you’ll have to start from the basics- NCERT books. The good part is that there is a significant overlap between GS Prelims, core GS subjects, and the Economics optional. So, the basics will be cleared while preparing for Economics for UPSC Prelims or the GS subject for UPSC Mains. Here’s a step-by-step guide on how to prepare Economics Optional for UPSC Mains:

Step 1: Clear Your Basics: Develop a basic understanding of the core concepts of Economics. Read Economics NCERTs from Class VIII to XII to get a good understanding of basic concepts.
Step 2: Enhance your knowledge: Read standard books like Ramesh Singh or Mishra and Puri to strengthen your understanding of the core concepts. It will enhance your knowledge and understanding. Relate the concepts you study with current affairs and real-life policies, and data.
Step 3: Make syllabus-specific notes: While reading the standard books, it is important to focus only on the topics that are a part of your Economics optional syllabus for UPSC. Make short notes on these topics for revising it optimally. Include diagrams, definitions, current events, data trends, and government policies.
Step 4: Practice Answer-Writing: UPSC Mains is largely about answer-writing. If you crack the art of answer writing, you will automatically score better. Start with the previous year’s questions that have been asked in the economics optional for UPSC Mains. Then, enroll in a good test series and practice answer-writing in stipulated time and space.
Step 5: Current Affairs & Revision: Economics optional for UPSC Mains is a combination of static and dynamic sections. To make your answers content-rich, it is important to include snippets from current events. Hence, constantly update your notes with recent happenings. Make a separate folder for news related to economics, and then segregate it on the basis of sections and sub-parts. Incorporate the current events in your answer-writing practice to maximize retention. Revise concepts weekly to increase retention of the study material.

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Booklist For Economics Optional For UPSC Mains

The resources and booklist for the economics optional are listed below. However, you do not need to read all of these books. Pick and choose the ones that you are comfortable with. Also, be extremely syllabus-specific and read only the relevant portions that are relevant to your economics optional syllabus.

Economics Optional Booklist
Book Title	Author
Indian Economy	Ramesh Singh
The Indian Economy	Sanjiv Verma
Indian Economy	Mishra and Puri
Indian Economy	R. Dutt and KPM Sundaram
Banking	S.B. Gupta
Dictionary of Economics	Graham Bannock, T.E. Baxter, Ray Rees
Economic Growth and Development	Mayer and Baldwin
Economic Survey: Twelve Five-Year Plan: New Industrial Policy	Government of India
Economics	Paul A. Samuelson
Economics Choice	Koutsweanik
Growth and Development	M.L. Jhingan
International Economics	Bo Soderston
International Economics	H.G. Mannur or Salvatore
International Trade	Bo Soderston
Macroeconomic Analysis	Edward Shapiro
Modern Banking	R.S. Sayers
Monetary Theory and Public Policy	Kenneth Kurihara
Money Supply in India: Concepts, Compilation and Analysis: Functions and Working	Reserve Bank of India
National Income Accounting	Neethu
Outline of Monetary Economics	A.C.I. Day
Public Finance	H.L. Bhatia
Public Finance	K.K. Andley and Sundharam
The Economic Times
Economic and Political Weekly

This is the complete overview of the Economics Optional for UPSC including the syllabus, booklist and preparation strategy. Make sure you remain syllabus-specific while reading the books prescribed for the Economics optional for UPSC.

Frequently Asked Questions

What are the pros of choosing the Economics Optional as a subject?

Some of the pros of choosing the economics optional for UPSC Mains are:

It is a rational, analytical, and logical subject. Hence, answers are objective in nature.
Due to the above reasons, it is highly scoring because answers are not left to interpretation.
It covers about 60% of the UPSC syllabus for GS Paper-3. Hence, there is a significant overlap between this optional and core GS subject.
The books and other resource materials are easily available.

Are NCERT books sufficient for the economics optional preparation?

NCERT books are great to build the foundation of optional subject preparation; however, to understand the advanced concepts and build a deeper understanding of the subject, studying the standard books is essential.

What is the syllabus of economics optional?

There are 2 papers in economics optional. Paper 1 deals with advanced economic theory (micro, macro, international) and Paper II deals with more applied (Indian economy, public finance, banking, etc).

Do I need a background in economics to choose economics as an optional subject?

No, you do not necessarily need a background in economics to choose economics as your optional; however, it definitely would put you at an advantage if you did. Aspirants without a background in economics would have to spend double the time to understand the basic concepts from scratch. However, ultimately, what matters is that you have an interest in the subject and are willing to put in the time and effort to study it.

Suggested Readings
UPSC Optional Subjects List	UPSC Sociology Optional Syllabus	UPSC Geography Optional Syllabus	UPSC Philosophy Optional Syllabus	UPSC PSIR Optional Syllabus	UPSC Commerce and Accountancy Syllabus

Author

Vrinda Verma

Vrinda is a skilled content writer with a passion for simplifying complex ideas, especially for UPSC aspirants. She combines academic insights with a clear, engaging writing style that helps aspirants navigate complex topics easily. She is a passionate reader, holding a degree in English Literature. Through her writing, she aims to make the UPSC journey a little less overwhelming by closing the gap between information and understanding.