The correct answer is: B. Panchayat
A panchayat is a local self-government institution in India. It is the smallest unit of administration in a state. Panchayats are responsible for a variety of functions, including rural development, education, health, and sanitation.
A block is an administrative unit in India. It is a subdivision of a district. Blocks are responsible for a variety of functions, including agriculture, rural development, education, and health.
A municipal council is a local government body in India. It is responsible for the administration of a city or town. Municipal councils are responsible for a variety of functions, including public health, sanitation, water supply, and roads.
A sub-division is an administrative unit in India. It is a subdivision of a district. Sub-divisions are responsible for a variety of functions, including law and order, revenue collection, and development.
Panchayats are the smallest form of administration in a state because they are responsible for the administration of the smallest unit of administration, which is the village. Panchayats are elected by the people of the village and are responsible for a variety of functions, including rural development, education, health, and sanitation.