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What’s Important in Economy for IAS Prelims

economy-books-for-ias-prelimsEconomy is a very important topic not just for IAS Prelims but for Mains, Interview as well. Also as a civil servant you are expected to remain up-to-date with relevant economic indicators and trends in order to frame effective policies. For this reason you should never ignore Economy questions in Paper 1 that can vary from 10-20 each year. In this prelims preparation post I list the topics/sub-topics that your should focus most on when preparing economy for Prelims and also the important economic data that you should know to score well in the economy questions. But that’s not all. At the end of this post, I also list the books that you should refer for economy from Prelims and IAS Mains perspective.

Analysis of Questions asked on Indian Economy

From a quick glance at TMH GS Manual, I prepared the following table that lists the topic-wise economy questions asked in Prelims from 2007 till 2012. Of course some questions are multi-disciplinary that can be classified in other topics as well like Geography, Current Affairs etc. But this is a good guide for us to know which economy topics to focus more as compared to others.

Topic/Chapter
2007
2008
2009
2010
2011
2012
Population-32-12
Employment-----10
Planning and Development--234-
National Income21-11-
Poverty-2-113
Prices and Inflation---21-
Agriculture11251-
Industry1--11-
Public Finance--151-
Money and Banking212122-
Foreign Trade2-222-
External Assistance-2-31-
Liberalisation--1---
Infrastructure-431--
Inclusion-----2
Sustainable Development-----1
Social Security-----1
Micellaneous-1----
TOTAL QUESTIONS81515361619

Source: TMH GS Manual

From the above table it’s clear that questions from two topics, Agriculture and Money & Banking, were asked almost every year from 2007 to 2012; and most in 2010 Prelims. It follows that you should focus more on these 2 topics or at least get them up in your economy priority list. Now let’s know what to prepare in these two topics.

Agriculture

  • Land Reforms
  • Green Revolution and Second Green Revolution
  • Minimum Support Prices (MSP), Procurement prices, Issue price (important. who decides the MSP, the current MSP for principal crops etc)
  • Buffer Stock (norms, current data)
  • Economic Cost of Foodgrains
  • Decentralised Procurement Scheme
  • Rising Food Subsidy
  • National Flood Security Bill
  • Agricultural Marketing
  • e-choupal
  • Trifed
  • Nafed
  • Storing facilities for Agriculture Products (role of FCI, CWC and other central and state agencies)
  • Agricultural Credit (linked to farmer suicides in many states)
  • Commodity Futures Market
  • Farm Waste Debate
  • Irrigation
  • National Food Security Mission (NFSM) and other Missions like National Bamboo Mission, National Horticulture Mission etc.
  • Macro Management of Agriculture (MMA)
  • Rashtriya Krishi Vikas Yojana (RKVY)
  • National Agricultural Policy, 2000 (should know the important points at all times)
  • Agricultural Insurance
  • Extension Services
  • National Mission for Sustainable Agriculture (NMSA)
  • WTO and the Indian Agriculture: Prospects and Challenges (also relevant for Mains)
  • WTO and Agricultural Subsidies (also relevant for Mains)

Money and Banking

  • Indian Money Market
  • Indian Capital Market
  • Monetary Policy Tools
  • Financial Institutions
  • Mutual Fund (MF)
  • Bank & Non-Bank Institutions
  • Non-Banking Financial Companies (NBFCS)
  • Reserve Bank of India
  • Marginal Standing Facility (MSF)
  • Base Rate
  • Nationalisation and Development of Banking
  • Financial Sector Reforms
  • Banking Sector Reform
  • New Rules for Opening Banks
  • The Menace of NPAS
  • Capital Adequacy Ratio (CAR) and Why to Maintain CAR?
  • Non-Resident Indian Deposits
  • Primary and Secondary Markets
  • Stock Exchange
  • SEBI
  • Important Terms of Stock Market
  • Short Selling
  • Insurance Industry
  • Insurance Reforms
  • National Export Insurance Account

Industry and Infrastructure

  • Industrial Policy Resolution, 1948, 1956, 1969, 1980, 1985-86
  • Disinvestment
  • Investment Challenge
  • New Manufacturing Policy
  • National Policy on Electronics
  • India Infrastructure and Finance Company

External Trade

  • Foreign Currency Assets
  • Foreign Exchange Reserve
  • Fixed Currency Regime
  • Floating Currency Regime
  • Managed Exchange Rates
  • Foreign Exchange Market
  • Exchange Rate in India
  • Trade Balance
  • Trade Policy
  • Depreciation
  • Devaluation
  • Revaluation
  • Appreciation
  • Current Account
  • Capital Account
  • Balance of Payment (BoP)
  • Convertibility
  • LERMS
  • NEER
  • REER
  • EFF
  • IMF Conditions on India
  • Hard Currency
  • Soft Currency
  • Hot Currency
  • Heated Currency
  • Cheap Currency
  • Dear Currency
  • Special Economic Zone
  • Autonomous Bodies
  • Other Organizations
  • Advisory Bodies

External Assistance and International Economic Organizations

This topic is also of high relevance for Mains GS paper.

  • International Monetary System
  • Bretton Woods Development
  • International Monetary Fund
  • World Bank
  • Asian Development Bank
  • OECD
  • World Trade Organisation (WTO)
  • WTO Negotiations and India

Public Finance

  • Budget
  • Fiscal Policy
  • Limiting Government Expenditure (fiscal deficit and other deficits)
  • Fiscal Consolidation in India
  • Zero-Base Budgeting
  • Charged Expenditure
  • Types of Budgets
  • Cut Motion
  • Interest Payments
  • Subsidies (direct cash transfer currently in the news)
  • Government Debt
  • State-Level Finances (the mess state governments are in)

Poverty, Social Security and Sustainable Development

  • Human and Gender Development
  • Inclusive Development
  • Poverty and Inclusive Growth (BPL definition, methods to estimate poverty and  recommendations of committees)
  • Inequality
  • Employment
  • Poverty Alleviation and Employment Generation Programmes
  • Social Protection
  • Rural Infrastructure
  • Urban Infrastructure
  • Skill Development
  • Education
  • Health
  • Women and Child Development

Planning, Growth and Development

  • Economic Growth and Development Definitions
  • Planned and Mixed Economy
  • Emphasis on the Public Sector
  • Origin and Expansion of Planning
  • Types of Planning
  • Major Objectives of Planning
  • Planning Commission
  • National Development Council
  • Central Planning
  • Multi-Level Planning
  • Way to Decentralised Planning and Importance
  • The Planning Commission & The Finance Commission
  • The Changing Nature and Role of Planning
  • Economic Reforms
  • Economic Reforms In India
  • Liberalisation, Privatisation and Globalisation

Inflation

  • Why Inflation Occurs
  • Types of Inflation
  • Other Variants of Inflation
  • Other Important Terms
  • Effects of Inflation

Indian Tax Structure

  • Methods of Taxation
  • Methods of Expenditure
  • Value Added Tax (and need of VAT)
  • Goods and Services Tax
  • Additional Excise Duty
  • CST Reforms
  • Service Tax
  • Tax Expenditure
  • Non-Tax Revenue

The above list might seem very long to some, but it is comprehensive in scope. Some of the topics above are required to be covered in-depth while some require reasonable acquaintance. Also questions on some of the topics listed above like external trade and assistance, planning, taxation, poverty and sustainable development are frequently asked in the GS Mains paper as well. Covering the topics listed above keeping in mind the relative importance with the help of the table will help you gain 15-20 valuable marks in the Prelims. And studying economy is fun as well. The question difficulty level is such that candidates with non-Economy background can answer the questions with ease. UPSC usually never asks questions based on economic theories in Prelims or Mains GS paper that are discipline-specific.

Books to refer for Prelims Economy Questions

As listed in books for IAS prelims, I recommend TMH Indian Economy by Ramesh Singh for covering economy syllabus for paper 1.  The syllabus coverage in this book is complete; in fact so complete that I have used this book as a reference for listing various sub-topics above to focus on when preparing Economy for Prelims.

Another book that is a must read is Economic Survey published my Oxford University Press on behalf of the Finance Ministry. Being the authentic government source for all economic data it is highly useful not just for Prelims but also for Mains. In fact questions are directly asked in the Mains quoting the Economic Survey. It comes out usually in the last week of January or first week of February every year before the budget presentation. The second part of Economic Survey contains the latest economic data and tables some of which are must-read for Prelims.

I hope you found this guide on preparing economy for Prelims useful; I will be glad to read your responses in the comments below.

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