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:

States that commercial banks accept deposits and lend out funds and are part of the money‑creating system (i.e., describe the banking/financial function).

A student can combine this with the standard distinction that banks are financial intermediaries to infer lending is a financial activity separate from production/trade.

Explains MUDRA (via banks/NBFCs) provides funding to small business sectors engaged in manufacturing, trading and services — an explicit link between bank lending and firms in the real economy.

One can extend this to argue lending finances real‑sector enterprises (trading firms), so bank loans enable real activity even if lending itself is a financial act.

Defines Priority Sector Lending as credit to sectors that impact large population segments and are employment‑intensive (agriculture, small enterprises) — i.e., banks target real economic activities.

A student could use the definition of 'real sector' as production/trade and conclude that loans to such sectors finance real‑sector activity, though lending remains a financial flow.

States RBI mandates banks to lend a portion of credit to specified vulnerable sectors (agriculture, micro/small enterprises) — shows regulatory focus on channeling bank funds into the real economy.

Combine with basic knowledge that trading companies are part of the real economy to assess whether bank credit to them supports the real sector.

Defines money supply aggregates in terms of public deposits with banks and excludes inter‑bank deposits — highlights banks' role in creating money via deposits/loans.

A student can use this to differentiate the monetary/financial nature of bank lending (money creation) from production of goods/services in the real sector.

Lists 'Any corporate' among entities that can issue rupee‑denominated (Masala) bonds overseas, showing corporates are common issuers of such instruments.

A student can combine this with the basic definition that 'corporates' are typically real‑sector units (producers/businesses) to ask whether the act of issuing bonds is a real‑sector activity or a financial activity carried out by a real‑sector unit.

States Masala Bonds can be issued by governmental bodies, NBFCs and eligible corporates — an explicit example linking corporates to rupee‑denominated overseas issuance.

Use this pattern (corporates as issuers) plus a world map/knowledge that corporates engage in production to evaluate whether issuing debt overseas changes their sectoral classification.

Explains Masala Bonds are rupee‑denominated bonds issued by entities including corporates to raise money abroad and notes who bears currency risk — framing these as financing operations.

A student can extend this by contrasting 'financing operations' (from the snippet) with 'real‑sector production' (standard economics) to judge if issuance itself is a financial rather than real activity.

Defines External Commercial Borrowing (ECB) and explicitly says Masala Bonds are a kind of ECB — classifying these instruments within debt/financial transactions.

Combine this classification (Masala = ECB = debt instrument) with the typical separation of 'real sector' and 'financial sector' to infer that issuing such debt is a financial transaction even if the issuer is a real‑sector firm.

Mentions rupee‑denominated debt includes Masala bonds raised by Indian companies — shows such issuances are recorded as debt flows, i.e., part of financial liabilities.

A student can use this to support the view that while the issuer (Indian company) may be a real‑sector entity, the bond issuance itself is reported as financial/debt, suggesting a financial‑sector classification for the activity.