Statement 1: The annexation of Indian states by the East India Company indeed cut off a major source of patronage for artisans and handicrafts people. This led to significant economic distress among these communities, as they lost their traditional sources of support and income.
Statement 2: The Doctrine of Lapse was a policy implemented by the British which allowed them to annex any princely state where the ruler did not have a direct heir. This policy contributed significantly to the suspicion and discontent among Indian rulers, as it threatened their sovereignty and autonomy.
Statement 3: The Religious Disabilities Act, 1856, did not aim to protect religious rights and properties; rather, it was perceived as an interference in religious affairs. It allowed individuals who converted to other religions to inherit property, which was seen as undermining traditional religious practices and beliefs.
Therefore, the correct statements are 1 and 2, making Option B: 1 and 2 Only the correct answer.