Economics • Economic BasicsMedium
What role does the informal micro-enterprise sector play in absorbing surplus labor displaced from traditional agricultural mechanization in rural Punjab?
A. It acts as a sponge sector providing low-productivity self-employment and petty trading opportunities✓ Correct Answer
B. It serves as the primary capital-intensive exporter of high-tech precision instruments
C. It completely replaces the organized manufacturing output of the state through corporate subcontracting
D. It operates exclusively on venture capital funding regulated directly by the Reserve Bank of India
💡 Solution & Explanation
The informal micro-enterprise sector absorbs surplus rural labor through informal repairs, small retail shops, and traditional handicrafts, offering subsistence-level self-employment. Precision instrument exports are concentrated in formal industrial clusters like Jalandhar. Organized manufacturing maintains a distinct structural dominance over informal micro-units in terms of output value. Informal enterprises rely on personal savings or local moneylenders rather than institutional venture capital.
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