Correct option is C
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The power to create new districts or alter or abolish existing districts rests with the State government. This can either be done through an executive order by simply issuing a notification in the official gazette or by passing a law in the State Assembly. Hence, statement 1 is correct.
The Centre has no role to play in the alteration of districts or the creation of new ones. States are free to decide on this matter.
If the state government wants to change the name of a district or a railway station, then the proposal must receive the nod of the Union Home Ministry. Hence statement 2 is correct.
The State government will propose a new name for a district and forward the proposal to the Union Home Ministry. The Home Ministry will forward the proposal to other departments. After that, the departments such as the Ministry of Earth Sciences, Intelligence Bureau, Department of Posts, Geographical Survey of India Sciences, and the Railway Ministry, provide their clearance to the proposal of the state government.
After examination of their replies, the state government receives a no-objection certificate. Then the name of the district changes.