eco module

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Economy 2

Copyright material not to be re-publishedAn Institute for IAS Examination

v PROGRAMME DETAILS

v FEE STRUCTURE

v APPLIED ECONOMY (MODULE) FOR CIVIL SERVICES PRELIMS ANDMAINS EXAMINATION

» Introduction

» Strategy of Preparation

» Source of Materials (Apart from class study)

» Paper Analysis

» Course Modules (1-10)

v SPECIFIC TERMS USED IN THE QUESTIONS

v HOW TO WRITE A GOOD ANSWER

v MODEL ANSWER

TABLE OF CONTENTS


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APPLIED ECONOMY (MODULE)for Civil Services(Prelims & Mains Examination)

INTRODUCTION

Being the most applied and dynamic part of General Studies starting from Prelims to interview,growing importance of Applied Economy for Civil Services Exam, goes without saying. It also playsa vital role in the day to day life of human beings. Therefore, the study of Economy always requiresan updated, careful, clear, basic and comprehensive study. Though it is not a tough task but it hasbeen felt that the majority of the aspirants try to make a distance with economy due to lack ofproper guidance and understanding of the subject which leads them to a fatal result. But, I havedecided to convert it into a success story, provided that they could trust and follow our guidelinesproperly.

Highlights:1. Focused approach on the basic part of Economy which will enable to understand and to have

a clear concept about day to day global economic happenings.2. Complete coverage of entire course of study that has been incepted directly or indirectly in

the syllabus of UPSC.3. Periodical seminar on the current economic issues.4. Seminar classes to solve individual problems.5. Regular objective and subjective test.6. Printed notes will be provided before starting of new topic to make comfortable during class

teaching and to save your time as well.

STRATEGY OF PREPARATION

Since each and every subject has its own nature and ideological base, therefore the way of studyor the way of interaction is decided accordingly. As far as Economy is concerned it has a strongtechnical and theoritical base which makes it some what difficult to understand, at the initial stage.On the other hand it has a Wide and Comprehensive applied part which is most dynamic, thereforeit needs close and regular watch. Hence, I could categorically say that the strategy of preparationwith respect to economy always requires the following parameters:-v Being a key portion of General Studies once the comprehensive study of economy it quite

necessary rather than adopting any sortcut method.v Formation of strong base and it could be possible only through class study and proper

guidance.v Being interactive with the day to day economic events.v Application based understanding of the subject matter.v A holistic approach should be developed.




Economy 4


Source of Materials (Apart from class study)1. The Hindu2. Yojana and Kurukshetra3. Economic Survey (Under proper guidance)4. India year Book (selected chapters)5. The Economic Time / The Financial express / The business Line (any one)6. The Frontline (selected articles or issues)7. All India Radio (Current Affairs Programmes)

PAPER ANALYSIS

In Prelims Exam Numbers of questions based on Economy during the last five years.v 2012 – 22 Qestions out of 100

v 2011 – 34 Qestions out of 100v 2010 – 47 Qestions out of 150v 2009 - 31 Qestions out of 150v 2008 – 25 Qestions out of 150v 2007 – 18 Qestions out of 150NOTE: It indicates towards the increasing role of economy in prelims.

Mains Exam:Paper I30 marks questions based on the topics mentioned in the syllabus and even more marks areadded if the number of question based on Current issues are covered.Paper-II90 marks based on the topics mentioned in the syllabus proposed by UPSC, covering almost allthe topics. Range of word limit is 25 words to 250 words.

In fact, 120 marks questions out of 600 play vital role for deciding the final result and more over forthe rank in the final result.

N.B. - If an aspirant takes interest in the study of economy he could be able to get a topic also forEssay for 200 Marks. It could be regarded as ‘BONUS’ being interactive with the study of Economy.

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Economy 5


LECTURE TOPICSMODULE – 1

v General Introduction.v Concepts of National Income

l GDP, GNP, NNP, Green GDPl Methods of Measurement.l Sectoral analysis viz. Primary, Secondary

& Tertiaryl C.S.O., NSSO & NSC.l Limitations and Activities not included in the

National Income.l COR, ICOR , Hindu growth rate etc.

v Economic Systems.l Capitalist Economy.l Socialistic Economy.l Mixed Economy.

v Transformation of mixed Economy.v Effects of Globalisation and New economic

reforms on mixed Economy.

MODULE – 2

Money and Bankingv Concept of Moneyv Kinds of Moneyv Concept of Money Supplyv Indian Financial system & Money Market

l RBI – Structure work and Role credit control.l Structure of Banking in Indial Current Schemes and Relevant Issues.

Inflationv Concept , Kinds and Measurementv WPI & CPIv Fundamental & Immediate factors of Inflationv Analysis of Global effect (US,Sub – Prime).v PDS analysisCapital or Stock Marketv Structure – Primary & Secondary Market.v Companies and its capitalv Stock Exchange and Share Indexv Comprehensive analysis of Share Market.v SEBI and its Role.v Credit Rating

MODULE - 3

v Fiscal system or Public Finance of India.l Fiscal Policy,l Budget – Structure, Kinds, Current Analysisl Taxation – Structure, Kinds, Reforms

Principles & Current Review.l MODVAT, CENVAT, MANVAT, VAT, CST, FBT,

etcv Concept of Deficit financing

l Kinds of deficitl Analysis of Fiscal deficitl FBRM Act.l Effect of Economic Reforms.l Finance Commission.

MODULE - 4

v Concept of Development & Growthl Model of Developmentl Difference between Development Report &

growth.l Concept and Model of Developmentl Balanced – Unbalanced – Trickle down &

Big Push Model.v Measurement of Development.

l UNDP & Human Development Report Analysis.v Factors hampering to Development

l Vig: Vicious Circle of Poverty; Spread &back – wash effects, etc.

Social Developmentv Concepts or Poverty and its Measurementv Unemployment – Its various forms in Indiav Running Programme for Social Sector.

(comprehensive knowledge required)v Demographic Issues

l Concept of Populationl Theory of Demographic Transitionl Theory of optimum populationl Data Analysis

Planning in Indiav Background






Economy 6


v Review of Five years Plan in India.v 11th five year Plan – strategy, objective &

Financing etc.v Kinds of Planning.v Role of Planning Commission and NDC.v Impacts of Globalisation on Planning

MODULE – 5

India’s Economic Interaction with the World(Foreign Sector)v Concept of Balance of Payment (BOP)v Structure of Balance of Payment (BOP)v Current A/c & Capital A/cv Government’s Endeavour for Controlling BOP

l Government’s reforms initiatives and Trade& Exim policies.

l EPCGS, ECGS, SEZ, EPIP, etc.v Dumping

MODULE – 6

Foreign Investment in Indiav Kinds – FDI,FII & MNCsv Policy of Government.v Different Routes of Investment.Foreign Exchange Policyv Convertibility of Moneyv Report of Tarapoore Committeev FERA & FEMAv Devaluation – Conditions & Effects.v Composition & Structure of Indian’s Foreign

Trade.v Direction of India’s Foregin Tradev Foreign Debt and Aid.

l Its Role and Effect on Economy.v Miscellaneous relevant concepts like Dumping,

Mechanism of Economic Integration etc.

MODULE – 7

International Organisationsv IMF, World Bank & WTOv Role of IMF in Indian Economyv Role of World Bank in Indian Eco.

v Different Aspects of WTOv Role of WTO in India with special reference to

Globalisation.v WIPO and its rolev Review of the India’s economic Interactions with

the world.v Miscellaneous applied Topics will be Discussedv Specific Terminology Analysis.

MODULE – 8

Infrastructural Sectorv Reform Programme since 1991v Energy , Gas & Oil.Industrial Sectorv New Industrial policyv MSMED Act, 2006v Public Private Partnership concept (PPP

Model) in India.v Dis-investmentv Impacts of Globalisation

MODULE – 9

Agricultural Sectorv Land formsv Crop Pattern in Indiav Irrigation Programme & Systemv Agricultural Marketing – NAFED, NCDC, etc.v Agricultural Financing & Micro Financingv Agricultural Price & Policyv Different schemes and Programmes started for

Farmers/ Agriculturev Agricultural Revolutionsv Second Green Revolution

Module – 10

v It will contain relevant Current Issues emergingbefore examination. The list of Topics would bedecided on the right moment.

N.B. :1. Relevant changes in the structure of Modules

are possible.2. Many other relevant topics & issues could be

covered during class study.






Economy 7


SPECIFIC TERMS USED IN THE QUESTIONSIn the main examination various words andterms are used to decide the ambit anddimensions of the answers. A majority ofstudents do not care it and as a result the getpoor marks. So, it is my kind advice to themthat they must take it into account beforewriting answers. Such terms are being givenbelow:-

AnalyseIn fact, it is one of the scientific techniques of writinganswers. Here, each and every aspects of the questionor the statement are taken into account. Every aspectis first discussed then examined and lastly concluded.But at the very end, all the aspects are clubbedtogether with due coordination as a whole.

ArgueHere, arguments are given in favour and against ofthe different parts of the questions. It is tried to be abalanced approach as far as possible. But itcould be more negative or positive according to therequirements of the question.

CommentHere, the personal view of the aspirants is necessary.It is different from the term “Argue”. A balancedapproach is expected including both negative andpositive aspects of the statement. Though, one cangive conclusion either for or against but not to anyone side. Hence, facts, data and incidents orexamples could be referred.

Critically ExamineHere, final conclusion or judgement is absolutenecessary. An aspirant could be in the role of critic.It means that he/she doesn’t be either for or againstbut with respect to some specific aspects he/shecan go in favour or against.

DiscussIn such a question or statement a candidate isfree to give or provide as much details as he/shethinks fit for the question. He/she doesn’t requireto examine or to explain the question, only thedetails of the different parts of the questions issufficient.

ElucidateIt requires explanation. A candidate has to giverelevant facts and figures according to the demandof question without making any difference with it.One should keep in mind that to elucidate meansto convince with the statement.

ExplainIt consists the similar meaning of Elucidate. But,here one has to be confined within the area of thestatement.

ExamineWhere there is a term like ‘Exam’ their must beresult. One shouldn’t be neutral or indecisive in sucha question. It requires close interpretation witha view to bring out the facts considering merits anddemerits. But clear conclusion should be drawn ineither direction.

ElaborateHere, the complete picture of the question orstatement is require to be presented. The mainobjective is to expose the clear meaning by providingbasis, background and related details.

IllustratedA candidate has to maintain the flow and directionof the statement. He/she required to provide relevantdata, facts, point and examples to explain thestatement.

JustifyIf a question or statement refers to any result ordecision, a candidate has to justify it with the helpof merits and demerits. One has to adopt a logicalway to make a justification.

ReviewIn fact, it is an expertise approach on the given topic.Every ins-and-outs to the statement could bepresented here, and lastly the result is produced.

SimplifyThe main objective is to make the statement asmuch easy as possible. Hence, meaning, definition,examples and other details are given.

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Economy 8


HOW TO WRITE A GOOD ANSWER

In fact, writing good answer is an art. it needsconsistent practice apart form wide knowledge ofsubject. As far as UPSC is concerned, it alwaysseeks “Intellectual Traits” in the writing of civilaspirants. The inherent meaning of this term refersthat in what way and how much your answer isdifferent from others.

And it could be possible upto a great extent by adopting following tips:-v Clear understanding of the question or every part of the question

v Answer should be penetratingv Proper Arrangement & Structure of Answer

v Simplicity of Language

v Clarity of Thoughts

v Logical Flow of Languagev Word limit should be maintained

v Use of appropriate figures, graphs & data

v Wherever necessary points should be made

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Economy 9


MODEL ANSWERS

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QUESTION : Bring out the FDI and employment implications of china being a manu-facturing hub and India a services hub?

(2010 – UPSC Mains – P- II) – 250 words.

ANSWER : China and India, both the countries are among the fastest developing eco-nomics of the world. Even during the period of economic slowdown, both thecountries not only remained least affected but also showed an attractive growthrate. No doubt this positive growth rate during the recessionary period re-sulted in generating faith among the foreign investors and thus attracted con-tinuous foreign Direct Investment in both the countries.

Apart from the flow of FDI, Several other factors have also contributed in de-veloping china as a manufacturing hub. Being rich in resources and hugerural population, China has strict labour laws and human rights conditionswhich do not support the growth of union and internal political upheaval in theindustrial sector. Thus supporting the growth of manufacturing industries.

While in case of India, it comprises of a large population of educated middleclass people. Also globally Indian workforce is considered much cheaper ascompared to some European countries. Due to this reason these countrieshave been interested in outsourcing their service industries such as BPOs,KPOs, LPOs and medical; and financial units . It is due to this reason India isdeveloping as services hub.

QUESTION : What is ‘Round Tripping ‘ in the context of FDI inflow, and why hasbeen in the news recently in the case of India? (2010- Mains)

ANSWER : Round tripping refers to routing of investment by a resident /Investor of onecountry through other country back to his own country. Also known as ‘TreatyShopping’, it is basically a money laundering technique.

Recently in the context of FDI inflow, round tripping has been in news becauseof the fear of tax evasion by the foreign investors. This investment is beingdone through the countries where taxes are negligible & with whom India has abilateral tax avoidance treaty (DTAA - Double Taxation Avoidance Agreement).Thus, in this entire process the invester pay either zero or negligible taxes.





eco module

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