Explanation:

Article 16 (1) was explained as an incident of guarantee of equality and clause (4) is an illustration of such guarantee.

Article 16(1) and (2) lay down provisions for equal opportunity of employment in the public sector. However, it is stated in clause 3 of Article 16 that nothing in this article shall prevent Parliament from making any law which prescribes to the citizens who are appointed to any office under the State in regard to any requirements as to residence within that State or Union territory prior to employment or appointment to any office under the State.

• Clause (4)- Nothing in this Article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which in the opinion of the State, is not adequately represented in the services under the state".
• Clause (4-A): Nothing in this article shall prevent the State from making provision for reservation in matters of promotion to any class or classes of posts in the services under the State in favour of the Scheduled Castes and the Scheduled Tribes, which in the opinion of the State are not adequately represented in the service of the State.
• Clause (4-B): Nothing in this article shall prevent the State from considering any unfilled vacancies of a year which are reserved for being filled up in that year in accordance with any provision for reservation made under clause (4) or Clause (4- A) as a separate class of vacancies to be filled up in any succeeding year or years and such class of vacancies shall not be considered together with the vacancies of the year in which they are being filled up for determining the ceiling of fifty percent reservation on total number of vacancies of that year.

Hence option 2nd is correct.