Solution

● Statement 1 is correct: Under the system of Subsidiary alliance, the allying Indian state’s ruler was forced to accept the permanent stationing of a British force within his territory. He was also compelled to pay a subsidy for its maintenance. The Indian ruler had to agree to the posting of a British resident in his court. The Indian ruler could not employ any European in his service without the prior consultation with the Company. Nor could he go to war or negotiate with any other Indian ruler without consulting the governor general. In return for all this, the British would defend the ruler from his enemies and adopt a policy of noninterference in the internal matters of the allied state. ● Statement 2 is incorrect: Subsidiary Alliance System was first introduced by the French East India Company Governor Joseph Francois Dupleix. It was later used by Lord Wellesley who was the Governor-General of India from 1798 to 1805.