Best Way To Prepare Economy For UPSC Prelims

Indian Economy is one of the subjects of the UPSC syllabus whose prominence is carried forward even after becoming an IAS/IPS officer. Being knowledgeable in the subject becomes inevitable if you are aspiring to become an IRS officer. Hence, gaining an in-depth understanding of Economics is crucial from UPSC Prelims point of view and should be given due consideration during UPSC exam preparation. 

Indian Economy syllabus overlaps in all the three stages of the Civil Services Examination, i.e Prelims, Mains, and Personality Test (Interview Round). Questions in the economy section are partly driven by current affairs. However, its preparation is often considered a challenge by most of the candidates as they lack a well-structured and effective preparation strategy.

The significance of the Indian Economy can be judged by the fact that a total of 14, 13, and 13 questions were asked in the 2020, 2019, and 2018 UPSC Prelims exams. Hence, the subject should be studied thoroughly and not taken for granted.  

Also read: 50 Days Revision Plan for the UPSC Prelims Exam 2021

UPSC Prelims Economics Syllabus

At the Prelims level, the Economics syllabus is primarily categorized into the following categories:

  • Economic and Social Development
  • Sustainable Development
  • Poverty, Inclusion
  • Demographics
  • Social Sector Initiatives, etc

Here, you must cover topics such as economic growth and development, finance, banking, budget, the balance of payments, poverty and related issues, population composition and related characteristics, social sector initiatives related to education, health and sanitation, and international financial institutions. 

Important Areas to Focus in UPSC Prelims Economy

Fiscal policy

  • Definition of the policy
  • Various characteristics of the policy
  • Components, receipts, revenue and capital account
  • Tax revenue
  • Expenditures
  • Influence on budget

Economic growth and development

  • Basic concepts of economics and definition of economy
  • Transfer and uses of resources
  • Macro and microeconomic policies
  • The balance between micro and macroeconomics
  • Impact of economic policies on the distribution of wealth
  • What are the determinants of growth and development of the country from an economic point of view
  • Concepts of MPI/HPI, HDI, PQLI, GDI/GII, GEM, TAI
  • Green index
  • India’s position in various economic indices

Poverty

  • Definition
  • Concept of distribution and deprivation
  • Causes of poverty
  • Concept of income and calories
  • Status and measurements of poverty
  • Different types of poverty eradication programs, and resource policies
  • Tribal rights

Inclusion

  • Types of inclusion
  • Recent initiatives related to inclusion
  • Relevance 
  • Financial inclusion

Indian Economy- Prelims vs Mains

A different approach is needed to tackle the Indian Economy for UPSC Prelims and Mains. The Economy syllabus covered at the UPSC Prelims level can be considered as the tip of the iceberg.

However, in UPSC Mains, in-depth coverage of the Indian Economy is done through various topics such as Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment, Inclusive growth and issues arising from it, Government Budgeting, Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth. Infrastructure: Energy, Ports, Roads, Airports, Railways etc.Investment models.

Hence, a conceptual understanding of Economics and the Indian economy is a must for answering questions related to the above-stated topics.

Also read: How to Prepare for UPSC Prelims CSAT?

Proven Tips to Prepare for UPSC Economic Prelims

# Tip 1- If you are someone with a non-commerce background and finding it difficult to comprehend even the simple economic topics, then it is recommended to start from the basics and refer to Class XI NCERT Economic books.

#Tip 2- Whereas NCERT books give you a solid foundation for understanding the basic Economic concepts, ‘Indian Economy’ by Ramesh Singh will equip you with the advanced knowledge related to crucial Economy concepts/topics.

# Tip 3- Understand the basic concepts and terms such as GDP, REPO, Reverse REPO, CRR, SLR, Inflation Indices, Growth, Inclusion, Development, etc, and their applications in day to day scenarios.

# Tip 4- Focus on clearing core topics of Economics such as GST, Niti Ayog, Structure of Taxation, LPG reforms, Inflation, Human Development, Banking, Money Supply, etc. Questions asked in the Economy exam are often related to these topics. Hence, a basic understanding of these topics is essential!

# Tip 5- Read a newspaper daily (The Hindu/The Indian Express) so that you are up to date with the country’s recent economic developments. Make a note of all the important highlights of the latest economic survey and the latest budget.

Read more: How to Read Newspaper for UPSC Civil Services Preparation?

2020 UPSC Prelims Economy Questions

Here are a few questions that were asked from the Economy section in the UPSC Prelims 2020:

Question: What is the importance of the term “Interest Coverage Ratio” of a firm in India?  

1.It helps in understanding the present risk of a firm that a bank is going to give loan to.

2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.

3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt.

Select the correct answer using the code given below: 

(a) 1 and 2 only 

(b) 2 only 

(c) 1 and 3 only 

(d) 1, 2 and 3

Answer: C

Question: Which of the following factors/policies were affecting the price of rice in India in the recent past? 

1. Minimum Support Price 

2. Government’s trading

3. Government’s stockpiling

4. Consumer subsidies

Select the correct answer using the code given below:

(a) 1, 2 and 4 only

(b) 1, 3 and 4 only

(c) 2 and 3 only 

(d) 1, 2, 3 and 4

Answer: D

Question: Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?

1. Working capital for maintenance of farm assets harvesters, 

2. Purchase of combine tractors and mini trucks requirements of farm

3. Consumption households 

4. Post-harvest expenses

5. Construction of family house and setting up of village cold storage facility

Select the correct answer using the code given below:

(a) 1, 2 and 5 only

(b) 1, 3 and 4 only

(c) 2,3,4 and 5 only

(d) 1, 2, 3, 4 and 5

Answer: B

Question: Consider the following statements :

1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).

2. The WPI does not capture changes in the prices of services, which CPI does.

3. The Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 3 only

(d) 1, 2 and 3

Answer: A

Question: In India, which of the following can be considered as public investment in agriculture? 

1. Fixing Minimum Support Price for agricultural produce of all crops 

2. Computerization of Primary Agricultural Credit Societies 

3. Social Capital development

4. Free electricity supply to farmers 

5. Waiver of agricultural loans by the banking system Setting up of cold storage facilities by the governments.

Select the correct answer using the code given below: 

(a) 1, 2 and 5 only

(b) 1, 3, 4 and 5 only 

(c) 2, 3 and 6 only 

(d) 1, 2, 3, 4, 5 and 6

Answer: C

Question: With reference to the Indian economy, consider the following statements:

1. Commercial Paper is a short-term unsecured promissory note.

2. Certificate of Deposit is a long-term of Instrument issued by RBI to a corporation.

3. ‘Call Money’ is a short-term finance used for interbank transactions.

4.”Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations.

Which of the statements given above is/are correct? 

(a) 1 and 2 only 

(b) 4 only 

(c) 1 and 3 only 

(a) 2, 3 and 4 only

Answer: C

UPSC Prelims Economy preparation becomes convenient and an easy task when you have PrepLadder by your side.

On PrepLadder you will find the most comprehensive learning material for Indian Economy preparation and everything you need to ace Civil Services Exam on one single platform.

This includes concise, effective, and well-planned video lectures by our Dream Team for UPSC, a well-structured and high yield QBank, highly competitive PrepTests based on real exam patterns, and Previous Year Papers in the form of tests

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Raminder Singh

Raminder is a Content Writer at PrepLadder. He is working to provide students with informative articles and the latest updates about UPSC and GATE exams.