Indian Polity : Special Status & Provisions, Special Areas & Schedules (1-12)
Neither I nor II
Statement I is incorrect. The Fifth Schedule of the Constitution of India does not stipulate that the State Government loses its executive power in Scheduled Areas. Instead, Paragraph 2 of the Fifth Schedule explicitly states that the executive power of a State extends to the Scheduled Areas therein. While the Governor has special responsibilities and powers regarding the administration of Scheduled Areas (e.g., modifying or suspending laws, establishing a Tribes Advisory Council), the State Government's executive authority is not replaced by a local body.
Statement II is incorrect. The Fifth Schedule empowers the Union Government to give directions to a State regarding the administration of Scheduled Areas (Paragraph 3). However, it does not provide for the Union Government to take over the total administration of such areas solely on the recommendations of the Governor. A complete takeover of a State's administration typically occurs under Article 356 (President's Rule), which operates independently of the specific provisions of the Fifth Schedule concerning Scheduled Areas.
Options (1), (2), and (3) are incorrect because both Statement I and Statement II are factually inaccurate regarding the provisions of the Fifth Schedule of the Constitution of India.