Explanation:

Indian Councils Act, 1861 ? The 1861 Act marked an advance in that the principle of representatives of non-officials in legislative bodies became accepted; laws were to be made after due deliberation, and as pieces of legislation they could be changed only by the same deliberative process. Law-making was thus no longer seen as the exclusive business of the executive. ? The portfolio system introduced by Lord Canning laid the foundations of cabinet government in India, each branch of the administration having its official head and spokesman in the government, who was responsible for its administration. Hence, statement 1 is correct. ? The Act, returned the legislative powers to provinces of Madras and Bombay which had been taken away in 1833. Hence, statement 2 is incorrect. However, the legislative councils established by the Act of 1861 possessed no real powers and had many weaknesses. The councils could not discuss important matters and no financial matters at all without previous approval of government. They had no control over budget. They could not discuss executive action. Final passing of the bill needed viceroy’s approval. Even if approved by the viceroy, the secretary of state could disallow a legislation. Indians associated as non-officials were members of elite sections only.