Solution
The correct answer is option 1. The passage explicitly states that "the draft act was closely modelled on its predecessor, the Forest Act of 1878," and that this earlier act "rested on a usurpation of rights of ownership by the colonial state." It was precisely this recognition that the 1982 act replicated colonial-era control mechanisms that transformed a specific dispute about one piece of legislation into a broader controversy about the entire orientation of state forest policy. Paragraph 2 makes this transition clear: the debate over the draft act "fuelled a larger controversy" because critics saw it as a continuation of colonial measures of control and regulation.
Option 2 is wrong (half right). While the violation of tribal and peasant rights is mentioned in paragraph 1 as a reason for opposition to the draft act, this describes the initial "raging controversy," not the reason it developed into the "larger controversy" about the overall direction of forest policy.
Option 3 is wrong (keyword trap). The passage does mention forest officials defending the act and grassroots organisations opposing it, but this describes the contours of the original debate, not the reason the controversy widened into a broader policy discussion.
Option 4 is wrong (out of scope). Although paragraph 2 notes that British-era forestry "emphasised revenue generation and commercial exploitation," the passage does not claim the 1982 draft act itself further enabled commercial exploitation by the bureaucracy. The escalation was driven by recognition of colonial continuity, not by a new commercial exploitation claim.