The optional subject in the UPSC Civil Services Mains Exam is divided into two papers, with each paper carrying 250 marks. This brings the total marks allotted for the optional subject to 500.
(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 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 the 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 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 labor,
(iii) Balanced and Unbalanced growth,
(iv) Human Capital and Economic Growth.
(v) Research and Development and Economic Growth
(b) 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.
(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.
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:
A The Pre Liberalization Era:
(i) Contribution of Vakil, Gadgil, and V.K.R.V. Rao.
(ii) Agriculture: Land Reforms and land tenure system, Green Revolution, and capital formation in agriculture.
(iii) Industry Trends in composition and growth, Role of the public and private sector, Small scale, and cottage industries.
(iv) National and Per capita income: patterns, trends, aggregate, and Sectoral composition and changes theirs in.
(v) Broad factors determining National Income and distribution, Measures of poverty, Trends in poverty, and inequality.
B The Post Liberalization Era:
(i) New Economic Reform and Agriculture: Agriculture and WTO, Food processing, Subsidies, Agricultural prices and public distribution system, Impact of public expenditure on agricultural growth.
(ii) New Economic Policy and Industry: Strategy of industrialization, Privatization, Disinvestments, Role of foreign direct investment, and multinationals.
(iii) New Economic Policy and Trade: Intellectual property rights: Implications of TRIPS, TRIMS,
GATS and new EXIM policy.
(iv) New Exchange Rate Regime: Partial and full convertibility, Capital account convertibility.
(v) New Economic Policy and Public Finance: Fiscal Responsibility Act, Twelfth Finance Commission and Fiscal Federalism and Fiscal Consolidation.
(vi) New Economic Policy and Monetary system. Role of RBI under the new regime.
(vii) Planning: From central Planning to indicative planning, Relation between planning and markets for growth and decentralized planning: 73rd and 74th Constitutional amendments.
(viii)New Economic Policy and Employment: Employment and poverty, Rural wages, Employment Generation, Poverty alleviation schemes, New Rural, Employment Guarantee Scheme.
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