Economics Optional Syllabus, Booklist & Preparation Strategy

Economics is one of the popular optional subjects among UPSC aspirants who have studied economics in their graduation. This subject enjoys a decent success rate in recent years thereby attracting more and more students to opt for this 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.

In this article, we’ve discussed the economics optional syllabus, preparation strategy and the recommended booklist for covering the economics optional syllabus for UPSC Mains Exam.

Economics Optional Syllabus For UPSC Mains

Economics Optional Syllabus For Paper-1

Economics Optional Syllabus For Paper-1

Advanced Micro Economics

Marshallian and Varrasiam Approach to Price determination.

Alternative Distribution Theories; Ricardo, Kaldor, Kaleeki.

Markets 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:


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)

Keyne’s 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

Economics Optional Syllabus For Paper-2

The Pre-Liberalization Era 

  • Contribution of Vakil, Gadgil and V.K.R.V. Rao.

  • Agricultrure : 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, 


Agricultural prices and public distribution system, 

Impact of public expenditure on agricultural growth.

New Economic Policy and Industry: 

The strategy of industrialization, 



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.


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 Economics Optional For UPSC Mains?

If you’ve from Economics background or have studied economics in your graduation, then you can start from the standard books 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 Economics optional. So, the basics will be cleared while preparing Economics for UPSC Prelims or 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.

  • 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.

  • Step 4: Practice Answer-Writing: UPSC Mains is largely about answer-writing. If you crack the art of answer writing, then nothing like it! Start with previous year questions that have been asked in 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!

Booklist For Economics Optional For UPSC Mains

The resources and booklist for economics optional is 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.

  • 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

  • Economical 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 Economics optional for UPSC.

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Current Affairs analysis