Recommended reference books for polity while preparing for the UPSC include "Indian Polity" by M. Laxmikant, which is considered essential for understanding the Constitution and political processes. Other useful texts are "Introduction to the Constitution of India" by D. D. Basu and "Constitution of India" by P.M. Bakshi. Additionally, "Social Justice in India" and other thematic compilations can provide insights into contemporary issues. Staying updated through government publications and periodicals is also beneficial for grasping current developments in Indian polity and governance.