Introduction

Parts of the UPSC syllabus

1. Indian economy
2. Indian society and social justice
3. Geo+Environment and ecology
4. Polity and governance
5. Science and tech
6. History + Art and culture
7. Ethics
8. International relations
9. Internal security
10. Disaster management
11. Current affairs
Prelims is a recognition test. There’s a difference between writing the correct answer and recognising the
correct answer.
Sources must be limited and reading unlimited.
Syllabus tells what UPSC expects from you and PYQs tell what you can expect from UPSC
For optimum benefit of the class, presence in the class and continuous revision of notes is required
How to read PYQs:
1. Read PYQs and mention topics next to them
2. After the subject is completed attempt the PYQs → Identify the grey areas
3. Work on the grey areas
Pre and main exam questions will be given after the chapter completion. Get it checked on the app
Main exam answer writing
Take off and landing analogy for the Main exam answers. Both start and end of the answer must be soft
and smooth.
Three aspects of an answer
1. Content
Kitchen masala analogy for knowledge and contents in a question.
2. Structure
3. Presentation
 underline and put keywords in box
 Draw diagrams
Tailwords can be divided primarily into two categories— descriptive and analytical

Division of newspaper notes

1. General news
2. Market and economy
3. Science and tech
4. Places in news
5. People in news
6. Awards
7. Books and authors

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 8. Sports

Root word and origin

 Oikonomia = Oikos(Household) + Nomos(Management)
The word economics is derived from a Greek word ‘Oikonomia’. The word is a combination of two other
Greek words oikos and nomos. Oikos means household or family. Whereas nomos means management
hence Oikonomia means household management. It refers to how a family manages its expenditure using
its limited resources.
As economics is derived from the word Oikonomia it can be defined as a discipline or a subject which deals
with the study of the process of household management. However, it is the simplest definition of economics
which is possible. The scope of Economics is much wider than that. In other words, economics can be
defined as a systematic discipline which deals with the study of the process of production, distribution and
consumption of goods and services.
The process of production distribution and consumption of goods and services can be termed as the
economic activities which constitute an economy. Hence, these economic activities or the economy is the
subject matter whereas economics is the subject which deals with study of this subject matter.

Shorts
 Economics from Greek 'Oikonomia': 'oikos' (household) + 'nomos' (management) = household
management
 Economics: At simplest level, study of household management; broader scope includes economic
activities such as production, distribution, and consumption
 Economy: Collective economic activities
 Economics: Study of economic activities/economy

Classification of economics
As a discipline economics can be broadly classified into following two parts—
1. Micro economics
2. Macro economics
This classification of economics into micro and macro was given by a Norwegian economist Ragnar Frisch.
Along with Jan Tinbergen of Holland, Ragnar Frisch was the first recipient of Nobel Prize in economics in
1969. Nobel Prize in economics is its popular name, officially it is termed as Sveriges Riksbank Pirze in
Economic Sciences. Sveriges Riksbank is the central bank of Sweden which is the oldest central bank in
the entire world. When this bank completed three hundred years of its existence on this occasion this award
was announced.
Micro economics and macro economics are different from each other but they are very closely associated
with each other. They both influence each other. Micro is a Greek word which means small and hence
micro economics deals with study of the smaller aspects of the economy. It deals with the study of those
individual units with which the economy is constituted. In other words, micro economics deals with the study
of the economic activities at the level of a family and at the level of a firm. It deals with the study of demand
and supply which are the basic units of economic activities. It also deals with the study of the market where
goods and services are bought and sold.
Macro is another Greek word which means large hence it can be said that macroeconomics deals with the
study of larger aspects of the economy. In other words, macroeconomics deals with the study of economic

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activities at the level of the entire society/country/state etc. It includes study of gross domestic product,
national income, economic growth, economic development, economic policies, inflation, unemployment and
so on.
GDP refers to the total value of finally marketable goods and services produced within the boundary of a
country in one financial year.
Shorts
 Classification of economics: Micro and macro by Ragnar Frisch
 Frisch: Recipient of the First Nobel Prize in economics in 1969, along with Jan Tinbergen
 Nobel Prize in economics officially termed as Sveriges Riksbank Prize in Economic Sciences
 Sveriges Riksbank: Oldest central bank, Sweden
 Microeconomics:
 Study of smaller aspects of economy
 Focus: individual units (families, firms)
 Topics: demand, supply, market dynamics
 Macroeconomics:
 Study of larger aspects of economy
 Focus: entire society, country, state
 Topics: GDP, national income, economic growth, development, policies, inflation, unemployment

Economic Growth and Development

Economic growth is a quantitative concept whereas economic development is a qualitative concept.
Quantitative concept means it is related to quantity and change in production whereas qualitative means
something that brings about qualitative change in one’s life.
Economic growth can be defined as increase in GDP over a period of time. For instance, when the
production in any economy increases over a period of time then it’s economic growth.
On the other hand, growth with equity is economic development. Along with increase in production when
equitable redistribution of resources takes place leading to improvement in the standard of living then it is
economic development. When the benefits of increase in production or economic growth reach the common
people then it is economic development. Because of increase in production employment is generated, the
people are made capable enough to procure the necessities of life such as food, shelter, clothes, education
and healthcare then it is termed as economic development.
It can be concluded that economic growth is essential for economic development but only growth cannot be
sufficient in order to ensure development. Development also requires proper redistribution of the resources.
For example, Green Revolution enhanced food grain production in India. It made India food sufficient.
However, even after that starvation continues to exist. It means that India is yet to become food secure. It
can be concluded that because of green revolution economic growth took place but economic development
still lags behind. In terms of GDP India is the fifth largest economy in the world but it is still categorised as a
developing country.
Key economic reforms must focus on increasing productivity, fostering innovation, enhancing infrastructure,
and e suring fiscal discipline. As a FM 1 would priaritise those reforms that promote sustainable growth,
improve lose of doing business and attract investments across sectors.
Taxation & Fiscal Reforms Agritech Integration
1. Simplify GST Agricultural
2. Direct Tax Code Market Reforms
3. Fiscal discipline Reforms
Agri Exports

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 Banking Sector
Infrastructure Development Financial Sector
Reforms Financial Inclusion
1. PPP
2. National Infrastructure Pipeline Capital Market deepening
3. Smart cities & digital infrastructure
Manufacturing and industry Boost
1. Make in India 2.0 Skill Development
Human Capital
2. Ease of doing B. Development
3. PLI Scheme expansion Health and Education

Green Economy
Energy &
Evnironmen Climate Action

Energy Efficiency

Trade & Foreign FTA negotiations

Investment
Attracting FDI

Export led growth

Sustainable growth supported by innovations, skilled and GG.

Economic Growth and development
 Economic growth: Quantitative concept, related to increase in GDP over time
 Example: Production increase in economy signifies economic growth
 Economic development: Qualitative concept, brings qualitative change in life
 Growth with equity: Equitable redistribution of resources, leading to improved standard of living
 Benefits reaching common people signify economic development
 Employment generation, access to necessities (food, shelter, clothes, education, healthcare)
denote economic development
 Relationship: Economic growth essential for development, but not sufficient. Development requires
proper redistribution of resources
 Example: Green Revolution in India
 Increased food grain production, made India food-sufficient
 Starvation still exists, indicating lack of food security
 GDP-wise, India ranks fifth globally, but classified as a developing country
Inclusive development
Development is a value laden concept. It means when the term development is used it can be concluded
that something positive is taking place. Development refers to gradual unfolding of the society in a positive
direction. Inclusive development is a combination of two important aspects — development of all and
development in all the aspects.
Development of all means that every single member in the society should be made a party to the process of
development. It means the benefits of development reach every single individual. It is based on the concept
of ‘Antyodaya’ to ‘Sarvodaya’. ‘Antyodaya’ refers to development of those/upliftment of those who are at the
bottom of the rank order. If it is done continuously the goal of ‘Sarvodaya’ can be achieved which means
upliftment of all.

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It is said that no chain is stronger than its weakest link. Similarly, no society is stronger than its weakest
member. Hence, for social empowerment the empowerment of the weakest has to be ensured. This is
development of all.
Development in all the aspects means economic development, socio-cultural development and political
development. Economic development refers to making people capable enough to procure the basic
necessities of life. On the other hand, socio-cultural development refers to elimination of discrimination
based on gender, caste, race, religion, region etc. Political development refers to democratisation of the
society. It refers to people being provided opportunities for political participation which includes the right to
contest elections and the right to choose our representatives. When all such forms of development take
place then it is development in all the aspects.
Development of all along with development in all the aspects leads to inclusive development.
Inclusive development
 Development in general is a Value-laden concept, signifies positive progress and gradual societal
improvement
 Inclusive development: Development for all, in all aspects
 Development for all: Benefits reach every individual, from 'Antyodaya' to 'Sarvodaya'
 'Antyodaya': Upliftment of the weakest
 'Sarvodaya': Upliftment of all
 Development in all aspects: Economic, socio-cultural, political
 Economic: Access to basic necessities
 Socio-cultural: Elimination of discrimination
 Political: Democratization, political participation
Sustainable development
Development is a positive concept however the consequences of development may not be always positive.
It may have a number of side effects. Development always comes at a cost. This cost of development is not
only monetary but may even be social and environmental.
In the process of development such as construction of dams, thermal power plants, airports etc. the local
people are displaced. They are the one who pay the cost of development but the benefits are taken away
by the others. This may lead to a feeling of relative deprivation(when we compare our condition with
someone else and in comparison when we feel deprived then it is termed as relative deprivation). This
relative deprivation may become a cause behind conflict in society.
In the process of development even the exhaustible resources are extracted in a reckless manner. Because
of this it becomes obvious that these resources maybe exhausted completely and they may no longer
remain available to the next generations. In the process of development land under cultivation is used for
different economic activities affecting production of food. In the process of development even deforestation
takes place. We also cause environmental pollution in different ways.
If this is how development takes place, this process of development may not be continued for long. That
process of development which can be continued generation after generation is termed as sustainable
development. In the process of development if the resources are used in a judicious manner they can be
preserved even for future. In the process of development if we take care of the environment it will benefit
not only the present generation but even the generations to come. Development should take place with a
human face. It means that those who are displaced are compensated adequately and they are rehabilitated
properly. This process of development can be termed as sustainable development.
Sometimes, even the objective of inclusive development may lead to rapid process of development which
may compromise the objective of sustainable development. The idea of sustainable development is based
on the belief that this earth and its resources have not been inherited by us from our ancestors but they are
something that we owe to our next generations.

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Sustainable development
 Cost of development can be monetary, social, environmental
 Development projects (dams, power plants, airports) displace local people, leading to relative
deprivation and societal conflict
 Reckless extraction of exhaustible resources threatens future availability
 Land use changes affect food production, deforestation, environmental pollution
 Sustainable development: Continuable across generations
 Judicious resource use preserves for the future
 Environmentally conscious development benefits present and future generations
 Development with a human face: Adequate compensation and rehabilitation for displaced
 Conflict: sometimes inclusive development may compromise sustainability
Types of Economies
Based on the fact that how exactly an economy functions and who exactly owns and controls the forces of
production the economies can be classified into different types:
1. Capitalist economy : Capitalism is an ideology which propounds a particular type of economic
arrangement known as the capitalist economy. In this type of economy the forces of production are
owned and controlled by individuals who are the capitalists. The capitalists are those who have
resources. Investment and re-investment are the means whereas maximisation of profit is the
objective.
In a capitalistic economy the government has a limited role. It acts as a facilitator and provides a
conducive environment for investment and business. The interference of the government is
minimum. Since the government keeps it’s hands away from the economy it is also known as ‘hands
off economy’. In French it is termed as ‘laissezfaire’. A capitalist economy is driven by market forces
that is demand and supply. Hence, it is also known as ‘free market’ economy.
2. Socialist economy : In socialist economy the role of the government is maximum. In this type of
economy the forces of production are owned and controlled by the state and it is the responsibility of
the state to ensure equitable redistribution of resources.
3. Mixed economy : It refers to that type of economy which has co-existence of public as well as
private investment. Here public investment means the investment done by the government and
private investment means the investment done by the individuals.
India is an example of mixed economy. It has public as well as private investment. Post-
independence during the first five-year plan India adopted Harrod-Domar model of development.
Harrod and Domar were two different economists who suggested that for a developing country
labour and capital are the most important factors for development. Such countries have sufficient
labour but in absence of the investors capital is not sufficient. Therefore, the government must play
the role of an investor. Based on this model the government in India started investing in business
along with the private investors. Hence, indian economy became a mixed economy. However,
gradually even the Indian economy is moving towards capitalistic arrangement.
Shorts
 Capitalist economy:
 Forces of production owned and controlled by capitalists (individuals with resources)
 Objective: Profit maximization through investment and reinvestmen
 Government: Limited role, acts as facilitator, minimal interference
 Driven by market forces (demand and supply), known as 'free market' economy or 'laissez-faire'
 Socialist economy:
 Government plays maximum role, owns and controls forces of production
 Responsibility: Ensure equitable redistribution of resources
 Mixed economy

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  Coexistence of public (government) and private(individuals’) investment
 Example: India
 Initially followed Harrod-Domar model, emphasizing labor and capital for development
 Government started investing alongside private investors, leading to mixed economy
 Gradual shift towards capitalist arrangement observed in Indian economy
Model questions
1. Explain the concept of economic growth and economic development. Critically analyse the fact that
economic growth alone may not lead to economic development.
2. Explain the concept of inflation and its impact over the economy. Mention the drawbacks of WPI
because of which it was replaced by CPI as the main index.

***

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