Which of the following activities constitute real sector in the economy?
- 1.Farmers harvesting their crops
- 2.Textile mills converting raw cotton into fabrics
- 3.A commercial bank lending money to a trading company
- 4.A corporate body issuing Rupee Denominated Bonds overseas
Select the correct answer using the code given below:
Answer & explanation
Answer: (a) 1 and 2 only
The real sector is the part of the economy that actually produces goods and services — farms, factories and the like. Bank lending and bond issues move money and claims around; they belong to the financial sector, however useful they are to production.
- ✓ 1. Harvesting crops is primary-sector production of real goods from natural resources.
- ✓ 2. A textile mill turning raw cotton into fabric is manufacturing — secondary-sector production.
- ✗ 3. A bank loan is a financial transaction: it creates a claim (a debt) rather than producing a good, so it is financial-sector activity.
- ✗ 4. Issuing rupee-denominated (masala) bonds abroad is a way of raising funds in financial markets, not production of goods or services.
Remember · Real sector = production of goods and services (agriculture, industry, services output). Lending, borrowing and bond issues = financial sector.
📘 Read it in NCERT: Class 10 Understanding Economic Development, Ch 2 (practise this chapter) · Class 10 Understanding Economic Development, Ch 2 (practise this chapter)
Sources
- NCERT Class 10 · Understanding Economic Development, Chapter 2 “The secondary sector covers activities in which natural products are changed into other forms through ways of manufacturing that we associate with industrial activity.”
- NCERT Class 10 · Understanding Economic Development, Chapter 2 “Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector.”
Question and answer: UPSC's official GS Paper I (2022, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·