The correct answer is 3 only. Key Points The British Government declared for the first time on August 20, 1917, that its objective was the gradual introduction of responsible Government in India. The Government of India Act of 1919 was enacted, which came into force in 1921. This Act is also known as Montagu- Chelmsford Reforms (Montagu was the Secretary of State for India and Lord Chelmsford was the Viceroy of India). The features of this Act were as follows: It relaxed the central control over the provinces by demarcating and separating the central and provincial subjects. The central and provincial legislatures were authorized to make laws on their respective list of subjects. The structure of the government continued to be centralized and unitary. It further divided the provincial subjects into two parts– transferred and reserved. Hence, Statement 1 is incorrect. The transferred subjects were to be administered by the Governor with the aid of Ministers responsible to the legislative council. The reserved subjects were to be administered by the Governor and his executive council without being responsible to the legislative council. This dual scheme of governance was known as ‘dyarchy’–a term derived from the Greek word diarchy which means the double rule. It introduced, for the first time, bicameralism and direct elections in the country. The Indian legislative council was replaced by a bicameral legislature consisting of an Upper House (Council of State) and a Lower House (Legislative Assembly). The majority of members of both the Houses were chosen by direct election. It granted franchises to a limited number of people based on property, tax, or education. It required that the three of the six members of the Viceroy’s Executive Council (other than the Commander-in-Chief) were to be Indian. It extended the principle of communal representation by providing separate electorates for Sikhs, Indian Christians, Anglo-Indians, and Europeans. Hence, Statement 2 is incorrect. It created a new office of the High Commissioner for India in London and transferred to him some of the functions hitherto performed by the Secretary of State for India. Hence, Statement 3 is correct. It provided for the establishment of a public service commission. Hence, a Central Public Service Commission was set up in 1926 for recruiting civil servants. It separated, for the first time, provincial budgets from the Central budget and authorized the provincial legislatures to enact their budgets. It provided for the appointment of a statutory commission to inquire into and report on its working after ten years of its coming into force.