The correct answer is: C. Either I or II is implicit
The statement says that the authority has not yet affected any cut in the water supply to the city, even though there has been less than normal rainfall in the catchment areas during the first two months of monsoon. This could be because the authority expects the rainfall to be normal during the remaining part of the monsoon, or because the present water level of the lakes supplying water to the city is adequate for normal supply.
Assumption I is that the rainfall during the remaining part of the monsoon may be adequate for normal water supply. This assumption is implicit in the statement because if the authority expected the rainfall to be below normal during the remaining part of the monsoon, it would have already affected a cut in the water supply to the city.
Assumption II is that the present water level of the lakes supplying water to the city may be adequate for normal supply. This assumption is also implicit in the statement because if the authority expected the present water level of the lakes to be below normal, it would have already affected a cut in the water supply to the city.
Therefore, either assumption I or assumption II is implicit in the statement.