The correct answer is: Only II follows.
The statement says that over 75 percent of the people in the city are living in slums and sub-standard houses. This is a reflection on the housing and urban development policies of the government. The government should review its policies in regard to urban housing. This would be a logical course of action to take in order to address the problem of slums and sub-standard housing.
However, the statement does not say anything about rural housing. It is possible that the government’s policies in regard to rural housing are already adequate. Therefore, it is not necessary to review these policies.
In conclusion, only course of action II follows.