: Economics : Optional Subject of Main Examination
1. Ricardian, Marshallian and
Walrasain approaches to price determination. Types of Markets and price
determination. Criteria orWelfare improvement. Alternate theories of
2. Functions of money - Measurement
of price level changes - Money and real balances - Monetary standards - High -
powered money and the Quantity theory of money, its variants and critiques
thereof - Demand for and supply of money - The money multiplier. Theories of
determination of interest rate - Interest and prices - Theories of inflation and
control of inflation.
3. Full employment and Says Law -
underemployment equilibrium -Keynes Theory of employment (and income)
determination - Critiques of Keynesian Theory.
4. The modern monetary system -
Banks, non-bank financial intermediaries, Discount House, and Central Bank.
Structure of Money and financial markets and control. Money market instruments,
bills and bonds. Real and nominal interest rates. Goals and instruments of
monetary management in closed and open economies. Relation between the Central
Bank and the Treasury. Proposal for ceiling on growth rate of money.
5. Public finance and its role in
market economy in stabilisation, supply stability, allocative efficiency,
distribution and development. Sources of revenue - Forms of Taxes and subsidies,
their incidence and effects; Limits to taxation, loans, crowding - out effects,
and limits to borrowing. Types of budget deficits - Public expenditure and its
6. International Economics
(i) Old and New theories of International Trade.
a) Comparative advantage, Terms of trade and offer curve.
b) Product cycle and Strategic trade theories.
c) Trade as an engine of growth and theories of underdevelopment in an open
(ii) Forms of protection.
(iii) Balance of Payments Adjustments: Alternative Approaches
a) Price versus income, income adjustments under fixed exchange rates.
b) Theories of policy mix.
c) Exchange rate adjustments under capital mobility.
d) Floating Rates and their implications for developing countries; Currency
(iv) (a) IMF and the World Bank.
(c) Trade Blocks and monetary unions.
7. Growth and development.
(i) Theories of growth: Classical and neo-classical theories; The Harrod model;
economic development under surplus Labour; wage-goods as a constraint on growth;
relative importance of physical and human capitals in growth; innovations and
development; Productivity, its growth and source of changes thereof. Factors
determining savings to income ratio and the capital-out put ratio.
(ii) Main features of growth:
Changes in Sectoral compositions of income; Changes in occupational
distribution; changes in income distribution; changes in consumption levels and
patterns; changes in savings and investment and in pattern of investment. Case
for and against industralization. Significance of agriculture in developing
(iii) Relation between state,
planning and growth, Changing roles of market and plans in growth economic
policy and growth.
(iv) Role of foreign capital and
technology in growth. The significance of multinationals.
(v) Welfare indicators and measures
of growth - Human development indices - The basic needs approach.
(vi) Concept of sustainable
development; convergence of levels of living of developed and developing
countries; meaning of self-reliance in growth and development.
I. Evolution of the Indian Economy
till independence. The Colonial Heritage: Land System & Agriculture, Taxes,
Money and credit, Trade, Exchange Rate, The Drain of Wealth controversy of late
19th Century. Randades critique of Laissez-Faire; Swadeshi movements; Gandhi and
II. Indian Economics in
Post-Independent Era - Contributions of Vakil, Gadgil and Rao. National and per
capita Income; Patterns, Trends, Aggregate and sectoral - composition and
changes therein. Broad factors determining National Income and its distribution;
Measures of poverty. Trends in below poverty-line proportion.
III. Employment: Factors
determining employment in short and long periods. Role of capital, wage-goods,
wage-rate and technology. Measures of unemployment. Relation between income,
poverty and employment, and issues of distribution and social justice.
Agriculture - Institutional setup
of land system size of agricultural holdings and efficiency - Green Revolution
and technological changes - Agricultural prices and terms of trade - Role of
public distribution and farm-subsidies on agricultural prices and production.
Employment and poverty in agriculture - Rural wages - employment schemes -
growth experience - land reforms. Regional disparities in agricultural growth.
Role of Agriculture in export.
IV. Industry: Industrial system of
India: Trends in Composition and growth. Role of public and private sectors,
Role of small and cottage industries. Indian industrial Strategy - Capital
versus consumer goods, wage-goods versus luxuries, capital - intensive versus
labour-intensive techniques, import-substituting versus export promotion.
Sickness and high-cost Industrial policies and their effects. Recent moves for
liberalisation and their effects on Indian industry.
V. Money and bariking: The monetary
institutions of India: Factors determining demand for and supply of money.
Sources of Reserve money - money multipliers - Techniques of money supply
regulation under open economy - Functioning of money market in India. Budget
defi.it and money supply. Issues in Reform of Monetary and Banking Sy stems.
VI. Index numbers of price levels -
Course of Price level in post-independence period - sources and causes of
inflation - role of monetary and supply factors in price level determination -
policies towards control of inflation. Effects of inflation under open economy.
VII. Trade, balance of payments and
exchange: Foreign trade of India; composition and direction shifts in trade
policy from import substitution to export promotion. Impact of liberalisation on
pattern of trade. Indias external Borrowings - the Debt problem. Exchange rate
of the rupee; Devaluations, depreciations and their effects on balance of
payments-Gold imports and Gold policy - convertibility on current and capital
accounts - rupee in an open economy. Integration of Indian economy with world
economy - India and the WTO.
VIII. Public Finance and Fiscal
policy: Characteristics of and trends in Indias Public Finance - Role of Taxes,
(direct and indirect) and subsidies - Fiscal and monetary deficits - public
expenditures and their significance -Public Finance and Inflation - Limiting
Governments debt - Recent fiscal policies and their effects.
IX. Economic Planning in India -
Trends in Savings and investment -Trends in Savings to Income and capital-output
ratios - Productivity, its sources, growth and trends - growth versus
distribution - Transition from Central Planning to indicative planning -
relation between Market and Plan-strategies for Growth, social justice and
Plans. Planning and increasing the growth rate.