Approaching Economy for UPSC-2020
Common Mistakes during Economy preparation
UPSC is not conducting admission or recruitment exam for Chartered Accountants, Investment Bankers or Professors for M.Com & Economics. Observe past papers, you will realize very general level questions are asked from the economy. Yes, UPSC Civil Service Exam offers Government jobs related to economies such as Indian Revenue Service (IRS), Corporate Law service, Indian Trade Service and various audit and account services. But whatever technical knowledge and understanding are required to perform those jobs, the Government will give you training after selection. Even if you keep IRS as your first job reference, they are not going to grill you for 30-40 minutes in the interview stage on taxation only. So always keep this in mind, instead of engaging in Ph.D. over every topic.
All the dates, names and numbers are not important for the economy. Since the last two years, UPSC got into a habit of asking ‘trends’ related to economic indicators such as Taxation, GDP, Current Account Deficit, import/export of agriculture commodities, etc. You need to have a basic idea only. You should not be spending 90% of your time chasing that 10% random information because prelims – cutoff is at ~50% of the total marks. And the prelim score is not counted in the final selection list.
Preparation Sources for Economy
Tamil Nadu State boards economics textbooks for class 11 and 12 available in English. They are much better
than the NCERT class 12 macroeconomics and microeconomics books.
§ NCERT Class 11: Indian Economic Development Textbook and Bipin Chandra India after Independence.
§ Introductions and conclusions of Last 3 years’ economic surveys from http://indiabudget.gov.in/
§ Chief Editor’s Desk (Preface) of last 3 years’ Yo jana & Kurukshetra magazines from
http://yojana.gov.in/Recent_archive_2018.asp (change year number for getting previous Archives)
§ NITI Reports namely 1) India @75 and 2) SDG Baseline Report
§ India Yearbook 2020: When it’s published by Ministry of Information and Broadcasting next year.
§ Newspaper: Indian Express.
§ Internet Resources such as Mrunal.org/Economy, pib.nic.in, arthpedia.in etc.
Trend Analysis: Economy in Prelims
Trend Analysis: Economy in Mains
UPSC Notification describes the Economy Prelims syllabus in only a single bullet point: “Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.” However, to prepare it an efficient manner you should divide into following pillars and subtopics:
Pillar # 1: Money, Banking, Finance, Insurance
The subtopics of this pillar include
Money: Basic concepts such as limitations of barter system, fiat money, legal tender, Digital Payment &
associated concepts like NEFT, RTGS, UPI, BHIM; and lastly Cryptocurrency.
§ Banking: RBI: Monetary policy (CRR, SLR, PSL etc), its functions, powers. Banking sector – evolution, types, Challenges NPA/ TBS, I&B Code, BASEL recapitalization etc.
§ Finance: Basics of Financial / Capital market, SEBI, Types of securities, Shares, Bonds, Derivatives, IPO,
Demat, ETF, P-Notes etc. Companies Act, CSR.
§ Insurance: Types of Insurance & Pension, EPFO, ESIC, IRDAI, PFRDA, Financial inclusion schemes,
regulations.
Pillar # 2: Fiscal Policy, Budget, Taxation
Constitutional and Parliamentary procedures related to Budgeting: Prepare from Indian Polity by M. Laxmikanth, especially Ch.22 (Parliament), Ch. 45 (Finance Commission), Ch. 49 (CAG).
§ Finance ministry, its departments, and its functions: Ch.13 of India Yearbook 2020 published by the Ministry of Information and Broadcasting.
§ Direct and indirect taxes: theory and provisions in the latest budget. Special attention to GST, and its associated bodies. Black Money & Demonetization.
§ Types of Deficits, FRBM targets & Challenges.
§ Last 3 years economic surveys: Their notable suggestions and chapter-wise introduction and conclusions from volume 1.
Pillar # 3: BoP, International Trade, Organizations and Agreements
Balance of Payment and its component under current account and capital account.
§ Current account deficit of India: Its trends, reason, and remedies
§ Exchange rate & Currency convertibility related theory. The weakening of rupee – reasons, and remedies.
§ Contemporary issues like Oil price, currency manipulation, protectionism, trade war, etc.
§ Notable international organizations, summits, treaties, agreements. WTO, IMF, BRICS Bank, AIIB, etc.
Pillar # 4: Sectors of Economy, GDP, Inflation
Organizations, Policies, Schemes, latest budget provisions for Agriculture, MSME, Textile sector. For Mains – focus on their Contemporary problems and remedies such as farm distress, loan waivers, MSME vs MNC etc.
§ Planning Commission and NITI Ayog.
§ Theory & Current issues of GDP, unemployment, inflation, WPI-CPI etc.
§ Microeconomics: It’s not asked every year. Not more than 1 MCQ is asked even when the topic is asked. So accordingly you may prepare or skip it.
§ For Mains Paper 3: Food processing Industry. You can get free material in Mrunal.org/economy. For Post- Independent Indian economy and its issues such as nationalization, land reforms, etc., do selective study of Bipin Chandra’s ‘India after independence’.
Pillar # 5: Infrastructure
Focus Area: Organizations, Laws, Policies, Schemes & Apps. and for Mains: Problems faced by individual
sector and its remedies.
§ Infrastructure topic can be subdivided into:
§ – Mining – with special emphasis on the coal and hydrocarbons.
§ – Energy infrastructure- Electricity, Gas and special emphasis on the renewable energy
§ – Transport infrastructure including shipping, inland water navigation, highways, aviation and Railways.
Although railway related budgetary announcements are rarely asked in the IAS exam so you need not spend
too much time here.
§ – Water, Sanitation, urban and rural housing. Notable schemes like Swachh Bharat Abhiyan, Smart City,
Amrut etc.
§ – Communication and IT infrastructure.
§ In GSM 3, we’ve a topic: Investment models. But when you look at the previous papers, very basic level
questions are asked related to problems and remedies with infrastructure financing and public private
partnership. So, you should not be wasting time in advanced financial mechanisms related to PPP.
Pillar # 6: Human Resources Development
It can be further subdivided into the following components.
Census & Population
§ From NCERT Sociology Class 12: Census definitions, demographic transition, demographic dividend, age
pyramid, etc. Then augment it with the latest census 2011 data from Majid Hussain’s geography of India
Chapter 13.
Health, Hunger, Education, Skilling, and Poverty
§ Health Policy, associated schemes, and Apps especially those related to mother, child, and nutrition.
Important organizations such as NPPA, National Health Authority, etc.
§ Education, skill development: Important schemes, organizations, and portals.
§ Definition and measurement of poverty using National and International methods. notable schemes for
poverty alleviation in urban and rural areas.
§ Provisions in the latest Budget & observations/suggestions made in last 3 Economic surveys such as
Universal Basic Income.
§ Important Acts such as national food security act, right to education act, MGNREGA
§ Important reports and indices such as UNDP’s human development report, Hunger index, global gender gap
index, etc.
Weaker Section:
§ Weaker section is further divided into minorities, SC-ST, OBC, Economically Weaker Section, women &
children, PH, elderly and LGBT.
§ Prepare the associated Constitutional, Statutory and executive bodies, laws, apps/portals and related
Supreme Court Judgements related to their protection and betterment.
§ Finally, Sustainable development goals and India’s progress from Niti Aayog Baseline report-2018:
niti.gov.in/content/sdg-india-index-baseline-report-2018
§ To conclude, the Economy is not rocket science. The economy is a scoring component of General Studies. It’s much
easier to master compared to certain other segments of GS, such as Art and Culture. All that is required from
your end is focused and disciplined preparation.