How to Prepare for INDIAN ECONOMIC SERVICE (IES)

How to Prepare for INDIAN ECONOMIC SERVICE (IES)

Hello friends, this is Bhawna Pal, an Economics post graduate from Fergusson College, Pune. I did my Bachelor in Economics from Banaras Hindu University (BHU). Today I am going to share with you about the most coveted service in the field of economics, ‘INDIAN ECONOMIC SERVICE’ conducted by UPSC. Most of us don’t have an idea about the scopes of the subjects we have taken in our Bachelors or Masters. So, this website is meant for supplementing your knowledge with the diverse scopes of various subjects. I really feel privileged to get the opportunity to share my knowledge and information regarding this exam. First of all, I will go with the introduction of this exam so that you can get a basic idea about what kind of exam exactly.
INDIAN ECONOMIC SERVICE
The Indian economic service (IES) is the administrative inter-ministerial civil service under group A of the central civil services of the executive branch of the Government of India.

Mode of Direct Recruitment
Friends, it is very imperative to mention here that selection of candidate is done on the basis of direct recruitment through an all India competitive exam, called the IES exam, conducted by UPSC. The notification for conduct of the Examination will, as far as possible, announce the number of vacancies (including reservation for Scheduled Castes, Scheduled Tribes, Physically Disabled categories and Other Backward Classes) to be filled, as indicated by the Cadre Controlling Authority.
Age Limit:
A candidate must have attained the age of 21 years and must not have attained the age of 30 years on the first day of January of the year in which the examination is held, subject to relaxation in the upper age limit for such categories as notified by the Government from time to time.

Educational Qualifications:
In order to sit in this exam, a candidate must have Post-graduate Degree in Economics or Applied Economics or Business Economics or Econometric from a recognized University. A candidate who has appeared at a qualifying examination, the passing of which shall render him/ her eligible to appear at the IES Examination, but has not been informed of the result, can also apply for admission to the examination.  
Scheme of Examination:
Here, I have discussed about the nature of the exam. I have tried to simplify the pattern as simple as possible. You can see the flow chart where it is clearly stated that The IES examination is structured into:
1. Written Examination Consisting of papers viz.
I.        General English (100 marks),
II.        General Knowledge (100).
In economics, there are four papers namely
I.        Economics Paper-I (200),
II.        Economics Paper-II (200),
III.        Economics Paper-III (200) and
IV.        Indian Economy (200)].
2.  Viva-voce (200):
A candidate, who obtains the minimum qualifying marks in the written examination, as fixed by the UPSC at their discretion, is called by UPSC for viva-voce. Candidates called for viva-voce are also required to undergo Medical Examination Part-I (i.e. Medical Examination minus X-Ray examination of Chest) by the Central Standing Medical Board. 
Steps for Appointment:
UPSC recommend to the Government, candidates successful in the IES Examination, for appointment to the service. Successful candidates are required to undergo Medical Examination Part-II (i.e. X-Ray examination of the Chest) by the Central Standing Medical Board. Offer of appointment is made to those successful candidates, who have been declared fit consequent to the Medical examinations, and after receipt of their satisfactory antecedent and character verification reports. After discussing about the background and nature of the exams, here comes the most important part i.e. the syllabus and the required books from where to get the right study materials. There is nothing to worry about this as I have mentioned the syllabus in a very lucid manner along with their sources. 
Syllabus for Examination
1.   GENERAL ENGLISH 
In the General English paper, Candidates will be required to write an essay in English. Other questions will be designed to test their understanding of English and workmanlike use of words. Passages will usually be set for summary or precise.  The questions will be based on the following: ·
I. Essay
II. Precise writing
III. Sentence formation
IV.Synonyms/ Antonyms
IV. Active/ Passive voice
V.Direct/Indirect speech
VI.Sentence correction

For all this you can refer to the book ‘Objective General English’ (arihant publication) by S.P BAKSHI which is considered to be a very good source for competitive English.
2. GENERAL STUDIES
This paper includes the general knowledge of every day observation regarding politics, economics, environmental and geographical aspects. For this section, reading NCERT (6th to 12th) would suffice.
3. ECONOMICS PAPERS
Friends, we have seen that, economics has major role to play in this exam as it consist of four papers of total 800 marks. Now, let’s discuss about the sections which are included in the respective papers of economics.
GENERAL ECONOMICS
1. ECO PAPER –I Includes Microeconomics, macroeconomics, and mathematical economics
2. Eco paper –II Includes Growth and development, international economics, monetary economics, and econometrics.
3. ECO Paper-III Includes Environmental economics and public finance.   4. ECO Paper- IV is completely related to Indian economics except few topics.
General Economics-I 
I have disintegrated each topic into small sub- topics so as to make it easy  for you to understand the syllabus thoroughly.
Micro economics:    
1. Theory of Consumer’s Demand: Cardinal Utility analysis, Indifference
Curve analysis-Income and Substitution Effects, the Slutsky theorem –       revealed Preference approach.

Sources: H.L Ahuja, A. koutsiannis, M.L Jhingan. You can refer any of the given books. But, for this section A. Koutsiannis is the good source where you can get concise material.
2. Theory of Production-Factors of Production-Production Functions-forms of Production Function: Cobb-Douglas, CES and Fixed Co-efficient type – Laws of returns-Returns to scale and returns to a factor-Partial equilibrium versus general equilibrium approach-Equilibrium of the firm and the industry.
Sources: Same as above  
3. Theory of Value: Pricing under various forms of market organization like perfect competition, monopoly, monopolistic competition and oligopoly.         Public Utility Pricing: Marginal cost pricing, Peak load pricing.
Sources: H.L Ahuja, A. koutsiannis, M.L Jhingan. You can refer any of the given books.
4. Theory of Distribution: Macro-distribution theories of Ricardo, Marx, Kalecki, Kaldor-Neo-classical approach: Marginal productivity theory of       determination of factor prices-factor shares and the ‘adding up’ problem –     Euler’s theorem-pricing of factors under imperfect competition.
H.L Ahuja is best for this section.
5. Welfare Economics-inter-personal comparison and aggregation problem,        divergence between social and private welfare, compensation principle,          Pareto optimality, Social choice and other recent schools, including              Coase and Sen.
SOURCES: HL Ahuja 
Macroeconomics:
1. Concept of national income and social accounting.
SOURCES: 12th NCERT Book for macroeconomics.
2. Measurement of national income. Inter-relationship between three           measures of national income in the presence of the Government sector       and international transactions
SOURCES: H.L Ahuja, 12th NCERT book, M.L Jhingan.
3. Theory of Employment, Output and Inflation-the Classical and neo-         classical approaches. Keynesian theory of Employment. Post-Keynesian       developments. Inflationary gap-Demand-Pull versus Cost-Push Inflation-       the Phillip’s Curve and its policy implications.
Sources: HL Ahuja; Shapiro; ML Jhingan; Dornbusch and fisher.
Mathematical Economics:
1. Mathematical Methods in Economics: Derivatives-basic rules of             differentiation and its applications to economic functions.
2. Optimization (concept) -Matrices and their applications in Economics, Input-Output model (concept).

3. Linear Programming and its applications.

Sources: Mathematical Economics by Mehta and Madnani; mathematical methods by Chiang.  
Note: For better understanding of basic Math’s, we must solve 12th NCERT  mathematics book.     
General Economics-II
Growth and Development:  
1. Concept of economic growth and development and their measurement.
Sources: R.K Lekhi, Mishra and Puri, M.L Jhingan.
2. Characteristics of less developed countries (LDCs) and obstacles to their development.
Sources: R.K Lekhi, Mishra and Puri, M.L Jhingan
3. Concepts of growth, poverty and income distribution.
Sources: R.K Lekhi, Mishra and Puri, M.L Jhingan  
4. Theories of growth: Classical Approach: Adam Smith, Marx and Schumpeter-Neo-classical Approach: Robinson, Solow, Kaldor and Harrod-Domar.
Sources: Meire and Baldwin, R.K Lekhi.
5. Theories of Economic Development: Rostow, Rosenstein-Rodan, Nurkse, Hirschman, Leibenstein and Arthur Lewis, Amin and Frank (Dependency school); respective role of the State and the market.
Sources: Meire and Baldwin; R.K Lekhi; ML Jhingan ; Mishra and Puri.  
  International Economics: 
1. Theories of International Trade: Ricardo, Haberler, Heckscher-Ohlin and Stolper-Samuelson-Theory of Tariffs-Regional Trade Arrangements.
Sources: Salvatore; M.L Jhingan.
2. Balance of Payments: Disequilibrium in Balance of Payments, Mechanism of Adjustments.
Sources: M.L Jhingan; Salvatore; soderston.  
3. Foreign Trade Multiplier, Exchange Rates, Import and Exchange Controls and Multiple Exchange Rates.
Sources: M.L Jhingan
4. Global Institutions: UN agencies; World Bank, IMF and WTO, Multinational Corporations.
Sources: M.L Jhingan  
Monetary economics:
1. Money and Banking: Its functions and value.
Sources: L.M Bhole; S.B Gupta.  
2. Quantity Theory of Money: Cash Transaction Approach and the Cash Balances Approach, Friedman’s Restatement of the Quantity Theory of Money.
Sources: HL AHUJA of macroeconomics. 
  3. The instruments of monetary control. The neutrality of money. The money multiplier.
Sources: SB Gupta; ML Jhingan; Ahuja
Econometrics and Statistics: 
1.Statistical and Econometric methods: Averages, dispersions, correlation and regression, time series, index numbers, sampling and survey methods, testing of hypotheses, simple non-parametric tests.
Sources: SP gupta
2. drawing of curves based on various linear and non-linear functions; least square methods, other multivariate analysis (only concepts and interpretation of results); ANOVA, factor analysis, principal component analysis, discriminant analysis. Income distributions: Pareto Law of distribution-log-normal distribution. Measurement of income inequality-Lorenz Curve and Gini co-efficient.
Sources: For econometrics – DM Guajarati; A.Koutsiannis & For statistics – Class 11th and 12th NCERT and the book by SP Gupta.           
General Economics III 
Environmental Economics:
1.Environmental Economics: Club of Rome, Founex report, Stockholm and Rio Earth summit reports, Convention on Biodiversity, Montreal Protocol on CFC, global warming.
2. Externalities, public goods, economic implication of various types of environmental degradation-air, noise, water pollution and exhaustion of non-renewable resources.

3. Resource accounting, biological wealth and its depletion or accretion as a part of GDP estimates and sustainable development; remedies:               Regulations, taxes, market based solutions such as privatization and           pollution permits.
4. Urbanization and migration-Lewis, Todaro; informal sector, urban labour   market, urban poverty.
5. Project Appraisal: Criteria for project choices: Internal rate of return, net present value and benefit-costs ratio-social rate of discount-shadow prices     of capital, unskilled labour and foreign exchange. Use of project appraisal       methods in India.
Sources: ML Jhingan; Stephen Smith. Note- For this section, internet is the good source as the question from this section is usually asked from the current topics.  
Public Finance: 
1. Financial and Capital Markets: Finance and economic development-financial markets-stock market, gilt market.
Source: L.M Bhole.
2. Foreign exchange market-Banking and insurance.
Source: LM Bhole
3. Fiscal policy and its objectives-limitations of fiscal policy.
 Source: R.K Lekhi; Mishra and Puri.
4. Theories of taxation and expenditure-objectives and effects of public expenditure-effects and incidence of taxation, deficit financing.
Sources: HL Ahuja of macroeconomics; R.K Lekhi
5. Theory of public debt, debt management, complementarity of monetary and fiscal policy with debt.
Sources: HL Ahuja of macroeconomics; R.K Lekhi
6. State, Market and Planning: Concept and types of planning-rationale of planning in a developing economy-limitations of planning, economics of regulations, decentralized planning.
Sources: HL Bhatia; R.K Lekhi; Musgrave and Musgrave. Other sources: newspapers ‘The economic times’
GENERAL ECONOMICS IV  
Indian Economics:
1. History of development and planning:
Alternative development strategies. Goal of self-reliance based on import substitution and the post-1991 globalization Strategies based on stabilization and structural adjustment packages.
Sources: Uma Kapila.

2. Planning and Relations:
Decentralized Planning: Panchayat experience-constitutional obligations, Balwantrai Mehta Committee, Ashok Mehta Committee and other reports, Financial aspects of 73rd and 74th constitutional amendments.  -Union-State financial relations: Constitutional provisions relating to fiscal and financial powers of the states, financal aspect for Sarkaria Commission Report.  Sources: For various committees, you may refer to economics special issue published by pratiyogita darpan.
3. Finance Commissions and their formulae for sharing taxes.
Source: R.K Lekhi of public finance.
4.Poverty, Unemployment and Human Development during plan period-Appraisal of Government measures-India’s human development record in global perspective.

Source: Dutta and sundaram: Mishra and Puri .

5. Agriculture and Rural Development:
Strategies including those relating to technologies and institutions: Land relations and land reforms, rural credit, modern farm inputs and marketing-price policy and subsidies; commercialization and diversification.
Source: same as above.
6. Rural development programs including poverty alleviation programs: Development of economic and social infrastructure.
Source: same as above.
7.India’s experience with Urbanization and Migration-Different types of migratory flows and their impact on the economies of their origin and destination, the process of growth of urban settlements: Urban strategies.  Source: R.K Lekhi of development; Mishra and puri.
8. Industry: Strategy of industrial development-Industrial Policy Reform; Reservation Policy relating to small scale industries. Sources of industrial finances-bank, share market, insurance companies, pension  funds, non-banking sources and foreign direct investment.  role of foreign capital for direct investment and portfolio investment.
Source: Dutta and sundaram  
9.Public sector reform, privatization and disinvestment.
Source: same as above.  
10. Labour: Employment, unemployment and under-employment-industrial relations and labour welfare-strategies for employment generation-Urban labour market and informal sector employment; report of National Commission on labour, Social issues relating to Labour eg. Child Labour, Bonded Labour.
Sources: AP Thirwall; .ML Jhingan.  
11. Foreign trade: Salient features of India’s foreign trade-composition, direction and organization of trade: Recent changes in trade policy; Balance of payments, tariff policy, exchange rate and WTO requirements.
Sources: Dutta sundarm 
12.Money and Banking:
Organization of India’s money market-changing roles of the Reserve Bank of India, commercial banks, development finance institutions, foreign banks and non-banking financial institutions.
Sources: H.L Ahuja of macroeconomics.  
13. Budgeting and Fiscal Policy: Tax, expenditure, budgetary deficits, debt and fiscal reforms.
Source: HL Ahuja of macroeconomics; RK Lekhi of public finance.
14. Black money and Parallel economy in India-definition, estimates, genesis, consequences and remedies. Other Sources include magazines such as yojana, kurukshetra and government websites like PIB. PRS.

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