Comprehensive Self Study Plan for Economics| IAS Prelims & Mains

How to use this study plan?

  1. This study plan limits itself to Economics
  2. We have kept 6 sources for completing the entire syllabus and we urge our students to follow only what’s been prescribed. Try not to go overboard
Sources
Source Source type Why this one?
1. CD’s Economy Series
2. CD’s Economic Survey
3. CD’s Budget
4. Current Affairs & B2B @CD
Primary source: To be revised multiple times These are made keeping the Civil Services Exam in mind and therefore are tailor made for your needs. Do Supplement with Current Affairs from CD’s news cards and stories
5. NCERT 12th Macroeconomics and introductory chapter of NCERT 12th Microeconomics Basic book: To be read once This is important to develop a basic understanding of Economic concepts
6. Sankar Ganesh Reference book To be referred for topics not given in the above sources or for supplementary understanding

 

Note while following the Plan 1. The mathematics involved need not be memorised but, the underlying concept behind the maths should be understood. However, the formulae for various types of budget deficits should be memorised
2. For every section, the sources if applicable should be read in the following order – NCERTs > CD’s Economy Series > Dr V’s lucid explainers with Examples (given as links) > Shankar Ganesh
3. Issues/terms frequently in news like GAAR, Quantitative Easing, Taper Tantrum, Gold should be made note of.
4. Make a note of the important and recently set-up committees wrt regard to Fiscal and Economic Reforms like Financial Sector Legislative Reforms Commission (FSLRC), Financial Action Task Force (FATF), Financial Stability and Development Council (FSDC), Nachiket Mor committee etc.

Daywise plan + Feedback questions with Explanations & Tikdams where applicable

Day 1 Introduction to Economics, Microeconomics & Macroeconomics • NCERT 12th Macroeconomics
• NCERT 12th Microeconomics
• Shankar Ganesh Chapter 1

Focus Area : 

Gather a basic understanding of
• What is economy, its types (eg closed/open economy) and characteristics
• Difference between economy and economics
• Macroeconomics & Microeconomics
• Microeconomics – Production dilemma – Decisions/choices made at a company, household or an individual level
• Sectors of Economy – Primary, Secondary, Tertiary Sectors
• Capitalist, State, Mixed Economic Systems – the system in India and reasons for its adoption

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

A “closed economy” is an economy in which:

a) The money supply is fully controlled

b) Deficit financing takes place

c) Only exports take place

d) Neither exports nor imports take place

Answer – d

Explanation – Closed to outsiders i.e no trade with outside world

Day 2 National Income Accounting and Development • NCERT 12th Macroeconomics – Chapter 2
• CD’s Economy Series – Chapter 1

Focus Area : 

Focus on the below concepts related to National Income and understand how they are calculated

• Gross National Product (GNP),

• Gross Domestic Product (GDP),

• Gross National Income (GNI),

• Factor cost, Market Price, Purchasing power parity(PPP),

• Per-Capita Income (PCI) Also know the pros and cons of the methods of their calculation

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

The national income of a country for a given period is equal to the:

A) total value of goods and services produced by the nationals

B) sum of total consumption and investment expenditure

C) sum of personal income of all individuals

D) money value of final goods and services produced

Answer – A

Explanation – The most straightforward question possible from the topic.


Day 3 – Revision


Day 4 + 5 Money & Inflation • NCERT 12th Macroeconomics – Chapter 4
• CD’s Economy Series – Chapter 3
• www.civilsdaily.com/blog/economics-inflation-explained-with-real-life-examples/

Focus Area : 

Pay attention to

• Differences between Inflation, Depression, Recession, Miscellaneous concepts like Speculation, Philip’s curve, deflation, disinflation, reflation, stagflation

• Types of Inflation – based on the rate of price increase – creeping, trotting, galloping,

• Types of Inflation – based on causes– Demand-pull, Cost-push, Structural

• What causes inflation in India and the Impact of Inflation on Indian Economy

• Inflation measurements like CPI, WPI, PPI, GDP deflator – their composition, base years, merits/demerits and who publishes them at what frequency.

• Concept of base year, recent changes and need for changes

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

India has experienced persistent and high food inflation in the recent past. What could be the reasons?

1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.

2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.

3. The food supply chain has structural constraints.

Which of the statements given above are correct?

a) 1 and 2 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2 and 3

Answer -b

Explanation – 1st statement is easily wrong. 30% decline in area under food grain is too drastic to happen in 5 years and if it were so, everyone would know about it. Infact there is hardly any decline in area under cultivation of food grains. Eliminate 1, you have the answer

Day 6 + 7 Banking • CD’s Economy Series – Chapter 4, 5
• www.civilsdaily.com/blog/economics-monetary-policy-explained-with-examples/

Focus Area : 

• Role and functions of RBI

• Monetary Policy measures by RBI and different benchmark rates eg Bank rate, repo rate, SLR, CRR, LAF, MSF

• Their utility and impact on money supply and the Economy

• Different types of Banks and their functioning– Commercial Banks, RRB’s, NABARD, Co-operative Banks, Development Banks, Merchant Banks, NBFC’s, RRBs etc.

• Banking reforms eg Nationalisation, Committees like Narsimhan Committees, Basel Norms etc., their need and impact

• Concepts – Financial Inclusion, Narrow Banking, Non-Performing Assets, Shadow Banks & Weak Bank & Bank Run

• Steps taken by the Govt and RBI in this regard. Eg: Jan Dan Yojana, Small banks and differentiated banks etc

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

In the context of Indian economy which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

1. To enable the Central Bank to control the amount of advances the banks can create.

2. To make the people’s deposits with banks safe and liquid.

3. To prevent the commercial banks from making excessive profits.

4. To force the banks to have sufficient vault cash to meet their day-to-day requirements.

Select the correct answer using the code given below:

a) 1 only

b) 1 and 2 only

c) 2 and 3 only

d) 1, 2, 3 and 4 only (2014)

Answer – a

Explanation – A statutory reserve is an amount of cash a financial institution, such as a bank, credit union, or insurance company, must keep on hand to meet the obligations incurred by virtue of accepting deposits and premium payments. The statutory reserves required of banks and credit unions are generally set by the nation’s central bank, and those required of insurance companies are set by statute or regulation by the national, state or provincial government or regulatory authority. Calculated in various ways, statutory reserves are required to ensure that financial institutions are capable of paying claims even in a calamitous situation.

Tikdam: 3rd can not be true. These are monetary policy intruments having nothing to do with banking profits.


Day 8 + 9 – Cumulative Revision


Day 10 + 11 Govt’s Role
• Budgeting & Fiscal policy
• NCERT 12th Macroeconomics – Chapter 5
• CD’s Economy Series – Chapter 8
• www.civilsdaily.com/blog/budget-deficits-explained/
• www.civilsdaily.com/blog/economics-fiscal-policy-explained/

Focus Area : 

Budget

• Budget’s Components, Revenue and Capital receipts and expenditure

• Plan and Non plan expenditure and their differences

• Terminology like pubic debt, External debt, Internal debt, Revenue Deficit, Primary Deficit, Deficit financing, monetization of debt, Fiscal consolidation, Zero-based Budgeting, etc

• Steps taken by the govt to bring down the Fiscal Deficit Example: FRBM Act, NK Singh Panel Fiscal policy

• Finance Commission (14th FC and its important provisions) + difference in terms of reference of the 15th FC

• FRBM Act, steps by the Govt to improve financial health and stability

• Financial Stability and Development Council – objective and functions

• Financial Regulators – RBI, SEBI, IRDA, PFRDA – powers, functions, jurisdiction issues between the regulators

• Economic Reforms – lipberalization, privatization, globalization, SEZ’s, CEZ’s etc. • Govt’s financial resources – Tax and Non-tax revenues, Disinvestment, Borrowings (internal and external), User Charges.

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit?

1. Reducing revenue expenditure

2. Introducing new welfare schemes

3. Rationalizing subsidies

4. Reducing import duty

Select the correct answer using the code given below.

a) 1 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2, 3 and 4

Answer – c

Explanation – A budget deficit is an indicator of financial health in which expenditures exceeds revenue. The term is most commonly used to refer to Government spending. Reducing revenue expenditure and rationalizing subsidies will reduce the expenditure of the Government Whereas, introducing new welfare schemes will increase Government expenditure and reducing import duty will reduce government revenue

Tikdam: 2 will increase exepnditure where as 1 and 3 will reduce the expenditure thus defict

Day 12 + 13 Govt’s Role
• Taxation
• NCERT 12th Macroeconomics – Chapter 5
• CD’s Economy Series – Chapter 9

Focus Area : 

Develop a proper understanding of the following:

• Direct & Indirect taxes

• Direct Tax like Corporate Tax, Income Tax, Wealth Tax, Stock Market transactions

• Indirect Tax like Excise Tax, Customs, VAT, Service tax, GST

• Taxation Reforms – Direct Tax Code (DTC), General Anti-Avoidance Rule (GAAR), GST, Place of Effective Management (PoEM) and their critical analysis & issues with their implementation

• Basic concepts like Tax Base, Progressive taxation,Tax Expenditure, Tax avoidance, Tax evasion, Tax Havens, Tax elasticity, Tax Buoyancy, Laffer curve, Crowding-out.

• Terms like Pigovian tax, Ad Valorem tax, Tobin Tax, Difference between a Cess and a Surcharge

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

The sales tax you pay while purchasing a toothpaste is a

a) Tax imposed by the Central Government.

b) Tax imposed by the central Government but collected by the State Government.

c) Tax imposed by the State Government but collected by the Central Government.

d) Tax imposed and collected by the State Government.

Answer – d

Explanation– The power to impose taxes on ‘sale of purchase of goods other than newspaper’ belongs to State (Entry list 54, State II)

Tikdam: sales tax/ VAT was imposed by states that’s why petrol prices vary across states

Day 14 + 15 Govt’s Role
• External sector/ Foreign Trade
• NCERT 12th Macroeconomics – Chapter 6
• CD’s Economy Series – Chapter 10
• www.civilsdaily.com/blog/economicscurrent-account-deficit-explained/

Focus Area : 

• Balance of Payments (BoP) – meaning, causes and remedies

• ‘Invisibles’ in external sector and its effect on BoP

• Capital and Current Account & its constituents.

• Capital and Current Account Convertibility – reasons for the present state (partial capital accunt convertibility), committees associated eg HR Khan committee

• A general idea about MRTP Act, 1969; FERA, 1973; FEMA, 1999

• Current Account Deficit (CAD) – meaning, implications of high/low CAD. Measures taken by the Govt to reduce CAD

• Forex Reserves – constituents, utility

• Currency Exchange rate – its determination.

• Concept of appreciation, depreciation, devaluation of currency, etc and differences between them.

• Impact on Forex reserves due to these phenomenon

• Rupee appreciation/depreciation/devaluation and its impact on domestic and external market & on imports and exports.

• Concept of NEER, Real Effective Exchange Rate REER

• Concepts like Trade deficits, Savings, Investment, J-curve effect

• India’s Foreign trade Policy – recent initiatives taken

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

Consider the following actions which the government can take:

1. Devaluing the domestic currency.

2. Reduction in the export subsidy.

3. Adopting suitable policies which attract greater FDI and more funds from FIIs.

Which of the above action/actions can help in reducing the current account deficit?

a) 1 and 2

b) 2 and 3

c) 1 and 3

d) 3 only

Answer – d

Explanation – Reduction in export subsidy would definitely harm as our exports would become costlier for other countries. Devaluing the domestic currency – imports become costlier, exports become cheaper so more exports, CAD come down eventually.


Day 16 – 18 : Cumulative Revision


Day 19 Planning • CD’s Economy Series – Chapter 2

Focus Area : 

Concetrate on

• Institutions involved in Planning in India – Planning Commission, Niti Aayog and their objective and critique of their role

• A general idea on how planning has evolved over the years (since Independence)

• Different plans and their focus areas

• How planning takes place at the State and National level

• Reasons for dissolution of Planning Commission

• Issues between Planning Commission and Finance Commission

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

Consider the following statements regarding Indian Planning:

1. The Second Five­Year Plan emphasized on the establishment of heavy industries.

2. The Third Five­Year Plan introduced the concept of import substitution as a strategy for industrialization.

Which of the statements given above is/ are correct?

A. 1 only

B. 2 only

C. Both 1 and 2

D. Neither 1 nor 2

Answer – C

Explanation – Pure Factual question. You need to know which plan Second Plan (1956-1961): The second five-year plan focused on industry, especially heavy industry. Domestic production of industrial products was encouraged, particularly in the development of the public sector. The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The need for foreign reserves was felt during the Fourth Five Year Plan (1969-1974). This facilitated growth in exports. Import substitution drew considerable attention. All these activities widened the industrial platform.

Day 20 Poverty, Inequality, and Unemployment • CD’s Economy Series – Chapter 7

Focus Area : 

• Indices for measuring poverty – their merits and limitations

• Concept of Poverty line (eg APL, BPL, Antyodaya)

• Various estimates and committees for estimation of poverty line and their merits and limitations eg Tendulkar, Rangarajan, Dadabhai Naoroji, World Bank’s estimates, etc

• Inequality and unemployment – causes, types and remedies

• Current affairs especially govt initiatives like Jan Dhan Yojna, PDS, Mudra Bank etc

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

The Multi-dimensional Poverty Index developed by Oxford Poverty and Human Development initiative with UNDP support covers which of the following?

1. Deprivation of education, health, assets and services at household level.

2. Purchasing power parity at national level.

3. Extent of budget deficit and GDP growth rate at national level.

Select the correct answer using the codes given below.

a) 1 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2 and 3

Answer – A

Tikdam: why would budget deficit and GDPgrowth rate matter for deciding the extent of poverty. Eliminate 3 and you get the answer

Day 21 + 22 Agriculture • CD’s Economy Series – Chapter 6

Focus Area : 

Note – Indian Agriculture is very important for Mains Exam

• State of Indian Agriculture, Interventions needed for improving the state of Indian agriculture & Land reforms

• Farm subsidies – need, mechanisms & types &negative impacts

• Other Govt Interventions

• Issues, working and drawbacks of MSP egime, buffere stocks and Public Distribution System (PDS)

• Targeted PDS, Antyodaya Anna Yojana (AAY), National Food Security Act

• Alternatives to PDS like Direct Benefit Transfers, (d) Agriculture Marketing

• Mechanism and issues in Marketing of Agricultural Produce – APMC Act, Model APMC Act, 2003, Private and Co-operative Sector in Marketing

• Technology missions and e-technology – mechanism, focus area, impact & shortcomings

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

With reference to micro-irrigation, which of the following statements is/are correct?

1. Fertilizer/nutrient loss can be reduced.

2. It is the only means of irrigation in dry land farming.

3. In some areas of farming, receding of ground water table can be checked. Select the correct answer using the codes given below:

a) 1 only

b) 2 and 3 only

c) 1 and 3 only

d) 1, 2 and 3

Answer – C

Explanation – Only means of irrigation. Red flag. Pause and think. As if no irrigation was possible before this. what about canals in Rajasthan and gujarat. Eliminate 2

Day 22 Food processing & related industries • CD’s Economy Series – Chapter 12

Focus Area : 

• Need and Status of Food processing sector

• Govt’s initiatives to boost the sector and evaluation of these measures and way forward

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

With what purpose is the Government of India promoting the concept of Mega Food Parks?

1. To provide good infrastructure facilities for the food processing industry.

2. To increase the processing of perishable items and reduce wastage.

3. To provide emerging and eco-friendly food processing technologies to entrepreneurs.

Select the correct answer using the codes given below:

a) 1 only

b) 1 and 2 only

c) 2 and 3 only

d) 1, 2 and 3

Answer – D


Day 23- 26 : Cumulative Revision


Day 27 + 28 International economic organizations • CD’s Economy Series – Chapter 11

Focus Area : 

Note: The recently joined members of these organisations and if India was an original member or not Bretton Wood Twins- World Bank, IMF

• Their purpose and beneficiary audience

• Reports published by WB and IMF

• Relevance of IMF and WB to the developing countries (especially India)

• SDR’s – what are they and why were they needed World Trade Organisation (WTO)

• Evolution and purpose and functioning (eg ‘one country one vote’ principle)

• WTO principles– Most Favoured Nation (MFN)- non-discriminatory Trade, General system of Preference (GSP) for developing countries and Preferential Trade Agreement (PTA), Free Trade Agreement (FTA) for economics integration

• Doha round – reasons for its stalling & Issue’s between developed and developing world

• WTO and India – benefits to India & issues faced

• Stages in economic integration – PTA > FTA > Customs Union > Monetary Union

• Safeguard mechanisms eg Sanitary and Phytosanitary agreement (SPS), Technical Barriers to Trade (TBT)

• WTO agreements

• Agreement on Agriculture(AoA) – Domestic support (Green Box, Amber Box, Blue Box), Export subsidies, Market access

• TRIPS and IPR Issues & IPR protection mechanisms like Copyrights, Trademark, Industrial Design, GI etc. Also note ay recently awarded GI tags

• General Agreement on Trade in Services (GATS)

• Protectionism and Import Substitution – meaning, mechanisms and differences

• Trade Agreements – countries with which India has (signed/looking to sign) trade agreements recently

• their objectives, recent summits & India’s role and stand on various involved issues eg India’s stand on TRIPS+ provisions in RCEP

• Benefits/ problems to India from these

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

1. Regarding the International Monetary Fund, which one of the following statements is correct?

a) It can grant loans to any country

b) It can grant loans to only developed countries

c) It grants loans to only member countries

d) It can grant loans to the central bank of a country

Answer – c

2. With reference to the ÔTrans-Pacific PartnershipÕ, consider the following statements:

1. It is an agreement among all the Pacific Rim countries except China and Russia.

2. It is a strategic alliance for the purpose of maritime security only. Which of the statements given above is/are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Answer – d

Tikdam

1. Obviously any body would grant loan to only member country

2. The Trans-Pacific Partnership was signed by only 12 member nations of Pacific rim, not all the Pacific Rim countries except China and Russia. The members are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. It is not a strategic alliance. It is a trade alliance.

Tikdam:  In news, all except China and Russia. There are umpteen number of island countries not in the pertnership. Only redflag. Infact it’s for trade

Day 29 Industrial sector • CD’s Economy Series – Chapter 13

Focus Area :

• Industrial development in India & Industrial Policies & their effects on growth • PSU’s – Objectives of PSU’s and categorization

• Reforms – post LPG era- Disinvestment, New Companies Act, 2013, Corporate Social Responsibility (CSR)

• MSME’s, Small-Scale Industries (SSI), Village and Cottage Industries (VCI)- basis of classification, their utility and govt measures for their support

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

In India, in the overall index of Industrial Production, the Indices of Eight Core Industries have a combined weight of 37.90%. Which of the following are among those Eight Core Industries?

1. Cement

2. Fertilizers

3. Natural Gas

4. Refinery products

5. Textiles Select the correct answer using the codes given below:

a) 1 and 5 only

b) 2, 3 and 4 only

c) 1, 2, 3 and 4 only

d) 1, 2, 3, 4 and 5

Answer – c

Day 30
Infrastructure • CD’s Economy Series – Chapter 14
Investment models • CD’s Economy Series – Chapter 15

Focus Area : 

• Infrastructure Sector in India: Status, Growth and Infrastructure Linkage
• Growth Drivers;
• Government Policy InitiativesDevelop an understanding of
• Investment Models: Public Sector Led Investment Model; Private Sector-Led Investment Model
• Public-Private Partnership Model: Definitions; Need for PPP; Prerequisites.
• Contracting, BOT, DBFO, Concessions, EPC, Swiss Challenge, HAM

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

Which one of the following is a purpose of “UDAY”, a scheme of the Government?
a) Providing technical and financial assistance to start-up entrepreneurs in the field of
renewable sources of energy
b) Providing electricity to every household in the countries by 2018
c) Replacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal
power plants over a period of time
d) Providing for financial turnaround and revival of power distribution companies

Answer – d

Explanation – UDAY Scheme by the Ministry of Power – Ujjwal DISCOM Assurance Yojna. UDAY provides for the financial turnaround and revival of Power Distribution companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem. Tikdam: Ujjwal DISCOM assurance Yojana. Solved if you know the full form


Day 31 – 35 : Cumulative Revision



Day 36 : Test


Day 37 Economic Survey 2016 • CD’s Economic Survey 2016 – Chapters 1-4
Day 38 Economic Survey 2016 • CD’s Economic Survey 2016 – Chapters 5-8
Day 39 Economic Survey 2016 • CD’s Economic Survey 2016 – Chapters 9-12
Day 40 Economic Survey 2016 • CD’s Economic Survey 2016 Vol 2 – Social infrastructure, Employment and Human Development
Day 41 Economic Survey 2017 • CD’s Economic Survey 2017 – Chapters 1-3
Day 42 Economic Survey 2017 • CD’s Economic Survey 2017 – Chapters 4-6
Day 43 Economic Survey 2017 • CD’s Economic Survey 2017 – Chapters 7-10
Day 44 Economic Survey 2017 • CD’s Economic Survey 2017 – Chapters 11-14
Day 45 Economic Survey 2018 • CD’s Economic Survey 2018 & Budget Series
Day 46 Economic Survey 2018 • CD’s Economic Survey 2018 & Budget Series
Day 47 Economic Survey 2018 • CD’s Economic Survey 2018 & Budget Series
Day 48 Economic Survey 2018 • CD’s Economic Survey 2018 & Budget Series

Focus Area : 

Make note of the Key terms and their meaning, especially the recent ones. UPSC tends to pick up specific terms from the Economic Survey in both Prelims and Mains The suggestions to various problems of the economy should be taken as it is from Economic Survey along with relevant data for Mains Answer writing/ Interviews

Previous year’s MCQs to judge one’s level of understanding + Tikdams:

Which of the following best exemplifies the meaning of the economic term “Helicopter Hoover”?

a) FRBM Act

b) Demonetization

c) Helicopter drop of food packets in flood affected areas

d) None of these

Answer – b

The Economic Survey 2017 describes demonetisation as a helicopter hoover as against helicopter dropping money in Quantitative Easing Caution: Many might select C because it mentions Helicopter. Know that “All that glitters is not Gold”. This is a trick choice to misguide those in hurry


Day 49 : Revision of Budget and Economic Survey



Day 50 – 55 : Cumulative Revision



Day 56 : Test


 

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