The correct answer is None of the above.

• Municipality means Urban local self-governance body.
• Ministry of Urban Development, Ministry of Defence & Ministry of Home affairs deals with municipal governance. Hence, Statement 2 is incorrect.
• It derives Constitutional validity from the 74th Constitutional Amendment Act 1992 which added Part-IXA and Schedule 12th in our Indian Constitution.
• It is not a Hierarchical body. Hence, Statement 1 is incorrect.

Article 243P

• In this Part, unless the context otherwise requires, 
  • "Committee" means a Committee constituted under Article 243S;
  • "district" means a district in a State;
  • "Metropolitan area" means an area having a population of ten lakhs or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas, specified by the Governor by public notification to be a Metropolitan area for the purposes of this Part;
  • "Municipal area" means the territorial area of a Municipality as is notified by the Governor;
  • "Municipality" means an institution of self-government constituted under Article 243Q; Hence, Statement 3 is incorrect.
  • "Panchayat" means a Panchayat constituted under Article 243B;
  • "Population" means the population as ascertained at the last preceding census of which the relevant figures have been published.

Article 243Q

• There shall be constituted in every State,
  • a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area;
  • a Municipal Council for a smaller urban area; and
  • a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part.