**Indian Economic Service Indian Statistical Service – IES Exam Syllabus 2009 **

**(****General Economics)**

**Standard and Syllabi for IES/ISS Exam 2009**

The standard of papers in General English and General Studies will be such as may be expected of a graduate of an Indian University.

The standard of papers in the other subjects will be that of the Master’s degree examination of an Indian University in the relevant disciplines. The candidates will be expected to illustrate theory by facts, and to analyse problems with the help of theory.

They will be expected to be particularly conversant with Indian problems in the field of Economic/Statistics.

**General English**

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 precis.

**General Studies**

General Knowledge including knowledge of current events and of such matters of every day observation and experience in their scientific aspects as may be expected of an educated person who has not made a special study of any scientific subject.

The paper will also include questions on Indian Polity including the political system and the Constitution of India, History of India and Geography of a nature which the candidate should be able to answer without special study.

**General Economics-I**

- Theory of Consumer’s Demand: Cardinal Utility analysis, Indifference Curve analysis – Income and Substitution Effects, the Slutsky theorem – revealed Preference approach.
- 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.
- Theory of Value: Pricing under various forms of market organisation like perfect competition, monopoly, monopolistic competition and oligopoly. Public Utility Pricing: Marginal cost pricing, Peak load pricing.
- 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.
- 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.
- Concept of national income and social accounting – measurement of national income – Inter-relationship between three measures of national income in the presence of the Government sector and international transactions. Measuring Economic Welfare – socio-economic indicators approach: PQLI and H.D. Index.
- Theory of Employment, Output and Inflation – the Classicial and neo-classical approaches – Keynesian theory of Employment – Post-Keynesian developments – the Inflationary gap – Demand-Pull versus Cost-Push Inflation – the Phillip’s Curve and its policy implications.
- Mathematical Methods in Economics: Derivatives – basic rules of differentiation and its applications to economic functions- Optimisation (concept) – Matrices and their applications in Economics, Input-Output model (concept), Linear Programming and its applications.

**General Economics-II**

- Concept of economic growth and development and their measurement – Characteristics of less developed countries (LDCs) and obstacles to their development – growth, poverty and income distribution – Theories of growth: Classicial Approach: Adam Smith, Marx and Schumpeter – Neo-classical Approach: Robinson, Solow, Kaldor and Harrod-Domar – 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.
- International Economics: Gains from International Trade, terms of trade, trade policy, international trade and economic development – Theories of International Trade: Ricardo, Haberler, Heckscher-Ohlin and Stolper-Samuelson – Theory of Tariffs – Regional Trade Arrangements.
- Balance of Payments: Disequilibrium in Balance of Payments, Mechanism of Adjustments, Foreign Trade Multiplier, Exchange Rates, Import and Exchange Controls and Multiple Exchange Rates.
- Global Institutions: UN agencies; World Bank, IMF and WTO, Multinational Corporations.
- Money and Banking: its functions and value-quantity Theory of Money: Cash Transaction Approach and the Cash Balances Approach, Friedman’s Restatement of the Quantity Theory of Money – the instruments of monetary control – the neutrality of money – the money multiplier.
- Statistical and Econometric methods: averages, dispersions, correlation and regression, time series, index numbers, sampling and survey methods, testing of hypotheses, simple non-parametric tests, 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 distrubution – measurement of income inequality – Lorenz Curve and Gini co-efficient.

**General Economics-III**

- Environmental Economics: Club of Rome, Founex report, Stockholm and Rio Earth summit reports, Convention on Biodiversity, Montreal Protocol on CFC, global warming; externalities, public goods, economic implication of various types of environmental degradation – air, noise, water pollution and exhaustion of non-renewable resources; 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 privatisation and pollution permits.
- Urbanisation and migration – Lewis, Todaro; informal sector, urban labour market, urban poverty.
- 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.
- Financial and Capital Markets: finance and economic development -financial markets – stock market, gilt market, foreign exchange market – Banking and insurance.
- Fiscal policy and its objectives – limitations of fiscal policy – theories of taxation and expenditure – objectives and effects of public expenditure – effects and incidence of taxation – deficit financing – theory of public debt, debt management, complementarity of monetary and fiscal policy with debt.
- State, Market and Planning: concept and types of planning – rationale of planning in a developing economy – limitations of planning, economics of regulations, decentralised planning.

**Indian Economics**

- History of development and planning – alternative development strategies – goal of self reliance based on import substitution and the post-1991 globalisation strategies based on stabilisation and structural adjustment packages.
- (a) Decentralised Planning: Panchayat experience-constitutional obligations, Balwantrai Mehta Committee, Ashok Mehta Committee and other reports, financial aspects of 73rd and 74th constitutional amendments.

(b) Union-State financial relations: Constitutional provisions relating to fiscal and financial powers of the states, financal aspect fo Sarkaria Commission Report, Finance Commissions and their formulae for sharing taxes. - Poverty, Unemployment and Human Development during plan period – Appraisal of Government measures – India’s human development record in global perspective.
- 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; commercialisation and diversification. Rural development programmes including poverty alleviation programmes: development of economic and social infrastructure.
- India’s experience with Urbanisation 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.
- 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. Public sector reform, privatisation and disinvestment.
- 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 e.g. Child labour, Bonded labour.
- Foreign trade: Salient features of India’s foreign trade – composition, direction and organisation of trade: recent changes in trade policy; Balance of payments, tariff policy, exchange rate and WTO requirements.
- Money and Banking: Organisation 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.
- Budgeting and Fiscal Policy: Tax, expenditure, budgetary deficits, debt and fiscal reforms. Black money and Parallel economy in India – definition, estimates, genesis, consequences and remedies.

**Statistics-I**

**(i) Probaility**

Elements of measure theory, Classical definitions and axiomatic approach. Sample space. Class of events and Probability measure. Laws of total and compound probability. Probability of m events out of n. Conditional probability, Bayes’ theorem. Random variables – discrete and continuous. Distribution function.

Standard probability distributions – Bernoulli, uniform, binomial, Poisson, geometric, rectangular, exponential, normal, Cauchy, hypergeometric, multinomial, Laplace, negative binomial, beta, gamma, lognormal and compound. Poisson distribution. Joint distributions, conditional distributions, Distributions of functions of random variables.

Convergence in distribution, in probability, with probability one and in mean square. Moments and cumulants. Mathematical expectation and conditional expectation. Characteristic function and moment and probability generating functions Inversion uniqueness and continuity theorems. Borel 0-1 law: Kolmogorov’s 0-1 law.

Tchebycheff’s and Kolmogorov’s inequalities. Laws of large numbers and central limit theorems for independent variables. Conditional expectation and Martingales.

**(ii) Statistical Methods**

- Collection, compilation and presentation of data, Charts, diagrams and histogram. Frequency distribution. Measures of location, dispersion, skewness and kurtosis. Bivariate and multivariate data. Association and contingency. Curve fitting and orthogonal polynomials. Bivariate normal distribution. regression-linear, polynomial. Distribution of the correlation coefficient, Partial and multiple correlation, Intraclass correlation, Correlation ratio.
- Standard errors and large sample test. Sampling distributions of x,s2, t, chi-squre and F; tests of significance based on them, Small sample tests.
- Non-parametric tests-Goodness of fit, sign, median, run, Wicloxon, Mann-Whitney, Wald-Wolfowitz and Kolmogorov-Smirnov. Rank order statistics-minimum, maximum, range and median. Concept of Asymptotic relative effciency.

**iii) Numerical Analysis**

Interpolation formulae (with remainder terms) due to Lagrange, Newton-Gregory, Newton Divided different, Gauss and Striling. Euler-Maclaurin’s summation formula. Inverse interpolation. Numerical integration and differentiation. Difference equations of the first order. Linear difference equations with constant coefficients.

**Statistics II**

**i) Linear Models**

Theory of linear estimation. Gauss-Markoff setup. Least square estimators. Use of g-inverse. analysis of one-way and two way classified data-fixed, mixed and random effect models. Tests for regression coefficients.

**ii) Estimation**

Characteristics of good estimator. Estimation methods of maximum likelihood, minimum chi-square, moments and least squares. Optimal properties of maximum likelihood estimators. Minimum variance unbiased estimators. Minimum variance bound estimators. Cramer-Rao inequality. Bhattacharya bounds. Sufficient estimator. factorisation theorem. Complete statistics.

Rao-Blackwell theorem. Confidence interval estimation. Optimum confidence bounds. Resampling, Bootstrap and Jacknife.

**iii) Hypotheses testing and Statistical Quality Control**

- Hypothesis testing: Simple and composite hypothesis. Two kinds of error. Critical region. Different types of critical regions and similar regions. Power function. Most powerful and uniformly most powerful tests. Neyman-Pearson fundamental lemma. Unbiased test. Randomised test. Likelihood ratio test. Wald’s SPRT, OC and ASN functions. Elements of decision and game theory.
- Statistical Quality Control: Control Charts for variable and attributes. Acceptance Sampling by attributes-Single, double, multiple and sequential Sampling plans; Concepts of AOQL and ATI; Acceptance Sampling by variables-use of Dodge-Romig and other tables.

**iv) Multivariate Analysis**

Multivariate normal distribution. Estimation of mean Vector and covariance matrix. Distribution of Hotelling’s T2-statistic, Mahalanobis’s D2-statistic, and their use in testing. Partial and multiple correlation coefficients in samples from a multivariate normal population. Wishart’s distribution, its reproductive and other properties. Wilk’s criterion. Discriminant function. Principal components. Canonical variates and correlations.

**Statistics III**

**i) Sampling Techniques**

Census versus sample survey. Pilot and large scale sample surveys. Role of NSS organisation. Simple random sampling with and without replacement. Stratified sampling and sample allocations. Cos and Variance functions. Ratio and Regression methods of estimation. Sampling with probability proportional to size. Cluster, double, multiphase, multistage and systematic sampling. Interpenetrating sub-sampling. Non-sampling errors.

**ii) Design and Analysis of Experiments**

Principles of design of experiments. Layout and analysis of completely randomised, randomised block and Latin square designs. Factorial experiments and confounding in 2n and 3n experiments. Split-plot and strip-plot designs. Construction and analysis of balanced and partially balanced incomplete block designs. Analysis of covariance. Analysis of non-orthogonal data. analysis of missing and mixed plot data.

**iii) Economic Statistics**

Components of time series. Methods of their determination-variate difference method. Yule-Slutsky effect. Correlogram. Autoregressive models of first and second order. Periodogram analysis. Index numbers of prices and quantities and their relative merits. Construction of index numbers of wholesale and consumer prices. Income distribution-Pareto and Engel curves. Concentration curve.

Methods of estimating national income. Inter-sectoral flows. Inter-industry table. Role of CSO.

**iv) Econometrics**

Theory and analysis of consumer demand-specification and estimation of demand functions. Demand elasticities. Structure and model. Estimation of parameters in single equation model-classical least squares, generalised least-square, heteroscedasticity, serial correlation, multi-collinearity, errors in variable model. Simultaneous equation models-Identification, rank and other conditions. Indirect least squares and two stage least squares. Short-term economic forecasting.

**Statistics-IV**

**(i) Stochastic Processes**

Specifications of a Stochastic Process, Markov chains, classification of states, limiting probabilities; stationary distribution; Random walk and Gambler’s ruin problem. Poisson process, Birth and death process; applications to Queues-M/M/I and M/M/C models. Branching Process.

**(ii) Operations Research**

Elements of linear programming. Simplex procedure. Pirnciple of duality. Transport and assignment problems. Single and multi-period inventory control models. ABC analysis. General simulation problems. Replacemnet models for items that fail and or items that deteriorate.

**(iii) Demography and Vital Statistics**

The life table, its constitution and properties. Makehams and Gompertz curves. National life tables. UN model life tables. Abridged life tables. Stable and stationary populations. Different birth rates. Total fertility rate. Gross and net reproduction rates. Different mortality rates. Standardised death rate. Internal and international migration: net migration.

International and postcensal estimates. Projection method including logistic curve fitting. Decennial population census in India.

**(iv) Computer Application and Data Processing**

**(a) Computer Application**

Computer system concepts: Computer system components and functions. The Central Processing unit, Main memory, Bit, Byte, Word, Input/Output Devices, Speeds and memory Capacities in computer systems.

Software concepts: Overview of Operating Systems, Types and Functions of Operating System, application Software, Software for multi-tasking, multi-programming, Batch Processign Mode, Time sharing mode, Concept of System Support Programme, Overview of Existing Software packages on Word Processing and Spreadsheets.

Overview of an application Specific Programme: Flow charts, Basics of Algorithm, Fundamental of design and analysis of Algorithm; Basics of data structure, Queue, Stack.

**(b) Data Processing**

**Data processing:** Digital Number System, Number conversions, Binary representation of integers, Binary representation of real numbers, Logical Data element like cjharacter, fields, records, files, Fundamentals of data transmission and processing incluidng error contro and error processing.

**Data base management:** Data Resource management. Data base and file organisation and procesing. (a) Direct, (b) Sequantial, (c) Indexed Sequential file. Concepts of Client Server architecture, Data Base Administrator. An overview of DBMS software.

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