(A) I, II and III
Statements I, II, and III are correct. India has no official religion; the Constitution provides freedom to profess and practice any religion; and the state can aid educational institutions run by religious communities. Statement IV is wrong — India is a secular state, not a theocracy.
The textbook clearly states India has no official religion (unlike Pakistan/Sri Lanka), and the Constitution guarantees religious freedom and prohibits discrimination. "Theocracy" means rule based on religion — the opposite of India's secular model. Examiners expect you to identify the false statement (IV) to eliminate wrong options.