Explanation:

‘Police’ and ‘law and order’ fall under the category of subjects within the domain of the State as per Entry 2 of List II of the Seventh Schedule in the Constitution of India. Thus, the principal responsibility for managing these subjects lies with the State Governments.

• However, the States have not been able to fully modernize and equip their police forces upto the desired level due to financial constraints. It is in this context that the Ministry of Home Affairs (MHA) has been supplementing the efforts and resources of the States, from time to time, by implementing the Scheme for Modernisation of State Police Forces (MPF Scheme) since 1969-70.
• The criteria determined for inter-State distribution of funds by the Government in the year 2005 include (i) population (35% weightage), (ii) sanctioned strength of police force (25% weightage), (iii) number of police stations (15% weightage) and (iv) incidence of crime per lakh population (25% weightage).

Hence only statement 2nd is correct.