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:

1. Farmers harvesting their crops — This is production of goods in agriculture, which is part of the real sector. Verdict: Correct.

2. Textile mills converting raw cotton into fabrics — This is manufacturing/production of goods, clearly within the real sector. Verdict: Correct.

3. A commercial bank lending money to a trading company — Bank lending is a financial sector activity, not real sector production. Verdict: Incorrect.

4. A corporate body issuing Rupee Denominated Bonds overseas — Issuing bonds is raising finance in the financial sector/capital market, not real sector activity. Verdict: Incorrect.

Hence, only 1 and 2 constitute the real sector.