Explanation:

The Indian Councils Act of 1861 made the beginning of the representative institutions by associating Indians with the law-making process. It, thus, provided that the Viceroy should nominate some Indians as non-official members of his expanded council. In 1862, Lord Canning, the then Viceroy, nominated three Indians to his legislative council–the Raja of Benaras, the Maharaja of Patiala, and Sir Dinkar Rao. Hence, statement 1 is correct. • The act also empowered the Viceroy to issue ordinances, without the concurrence of the legislative council, during an emergency. It also gave recognition to the ‘portfolio’ system, introduced by Lord Canning in 1859. • Indian Councils Act of 1909 and not the Indian Councils Act of 1861 provided (for the first time) for the association of Indians with the executive councils of the Viceroy and Governors. Satyendra Prasad Sinha became the first Indian to join the Viceroy’s executive council. He was appointed as the Law Member. Hence statement II is not correct. • Other provisions of the act were: o It introduced the concept of a ‘separate electorate’ for Muslims. Under this, the Muslim members were to be elected only by Muslim voters. o It retained the official majority in the Central legislative council but allowed the provincial legislative councils to have the nonofficial majority.