Economy : What to study?

Economy may be daunting to some, but the questions are based on your conceptual understanding of macroeconomics. If you have this conceptual clarity, you can answer every single question accurately, without having to memorize boatloads of data! So invest time in understanding the concepts and analyzing how all the parts fit together.

What to study in economy?

1*. GDP (factor cost/production method, market price/expenditure method, income method. Don’t just read definitions, analyze! When do we use one method vs. another? How will each method give us a different value?)

2. GNP (compare with GDP. When are the two different?)

3. NNP/NDP (why deduct depreciation?)

4*. Inflation (demand pull and cost push. Structural. Headline and core. CPI and WPI. Phillips curve, stagflation and skewflation. Why has inflation remained persistently high in India?)

5*. Monetary tools to combat inflation (there is always a question from this area) – CRR, SLR, Repo, open market operations, government securities and treasury bills.

6. Nominal vs real GDP/GNP/Net National Income etc. (i.e., current prices vs constant prices.)

6a. Base year selection (why does this matter? Why did we recently update to 2004-05 and are now planning to update to 2011-12? Aren’t we eroding the value of “constant” prices if we keeping changing the base year frequently?)

6b. GDP deflator. Just the definition here.

7*. MSME industries- also just the definition and current thresholds

8*. Budget process (you may have this covered in Polity already. Look at FRBMA goals also)

9*. Deficits in the budget- fiscal, primary, revenue, primary revenue, effective revenue

9a. Deficit financing (monetizing vs borrowing)

10. Balance of Payments- current account and capital account.

11*. Current Account Deficit. Financing it with capital inflows.

12. FDI, FII, ECBs.

13. Capital account convertibility

14. Currency- fixed vs floating. LERMS (Liberalized Exchange Rate Management System).

15. Why is the rupee in a free fall? How is this good/bad for India? Why are some countries competitively devaluing their currencies (“currency war”)? NEER and REER if you have the time.

16*. Demographic Transition Theory (another area which frequently shows up in the exam)

17. Banking: all the stuff under #5 above + base rate, priority sector lending, NPAs, SARFAESI Act. No need to go into excessive detail. Read any conceptual stuff that shows up in the newspapers.

18*. National Manufacturing Policy (asked in both Prelims and Mains last year). Maybe also look at the National Minerals Policy this year.

19. Savings and investment rates (both expressed as % of GDP). First understanding how they are different. India has a higher investment rate than savings rate. How is that possible?

20*. Taxation- may be important this year due to GST. (direct and indirect. progressive and regressive. Pigovian. VAT, GST)

21*. RGESS may show up this year. Keep on the lookout for such current-affairs related topics.

22*. Inclusive growth. Maybe focus on gender inclusion.

23. Agricultural subsidies, PDS, Food Security.

Source: Team work for CSE-2015