Explanation:

• Statement 1 is incorrect: The Modified PKC-ERCP Project aims to integrate the PKC link project with the Eastern Rajasthan Canal Project, not the Western Rajasthan Canal Project.

• Statement 2 is correct: The ERCP focuses on intra-basin water transfer within the Chambal basin to address water deficits in several districts of eastern Rajasthan.

• Statement 3 is incorrect: The MoU involves collaboration between Rajasthan and Madhya Pradesh, not Gujarat.

• The Modified PKC-ERCP Project is a collaboration between Rajasthan and Madhya Pradesh, aligning with the national perspective plan of interlinking rivers.

• The PKC link project involves diverting water from the Kalisindh tributary and river Newaj to the Chambal River.

• The ERCP focuses on transferring surplus monsoon water from Kalisindh, Parvati, Mej, and Chakan subbasins to water-deficient sub-basins of Banas, Gambhiri, Banganga, and Parbati.

• The Memorandum of Understanding addresses water sharing, cost and benefit distribution, implementation mechanisms, and water management in the Chambal basin.

Why in News?

• The collaboration between Rajasthan and Madhya Pradesh, along with the Union Ministry of Jal Shakti, for the implementation of the Modified Parbati-Kalisindh-Chambal-ERCP (Modified PKC-ERCP) Link Project.

Hence option 1st is correct.