Explanation:

• Lord Dalhousie came out to India as the Governor-General in 1848, He was from the beginning determined to extend direct British rule over as large an area as possible.
• The chief instrument through which Lord Dalhousie implemented his policy of annexation was the Doctrine of Lapse. Under this Doctrine, when the ruler of a protected state died without a natural heir, his state was not to pass to an adopted heir as sanctioned by the age-old tradition of the country. Instead, it was to be annexed to the British dominions unless the adoption had been clearly approved earlier by the British authorities. Many states, including Satara in 1848 and Nagpur and Jhansi in 1854, were annexed by applying this doctrine.
• Dalhousie also refused to recognise the titles of many ex-rulers or to pay their pensions. Thus, the titles of the Nawabs of Carnatic and of Surat and the Raja of Tanjore were extinguished. Similarly, after the death of the ex-Peshwa Baji Rao II, who had been made the Raja of Bithur, Dalhousie refused to extend his pay or pension to his adopted son, Nana Saheb.
• Lord Dalhousie was keen on annexing the kingdom of Avadh. But the task presented certain difficulties. For one, the Nawabs of Avadh had been British allies since the Battle of Buxar. Moreover, they had been most obedient to the British over the years. The Nawab of Avadh had many heirs and could not therefore be covered by the Doctrine of Lapse. Some other pretext had to be found for depriving him of his dominions. Finally, Lord Dalhousie hit upon the idea of alleviating the plight of the people of Avadh Nawab Wajid Ali Shah was accused of having misgoverned his state and of refusing to introduce reforms. His state was therefore annexed in 1856.
• Hence, only statement 2 is correct.