The 11th Schedule of the Indian Constitution pertains to the Panchayati Raj system, a system of local self-government for rural areas in India.

Option 1 is incorrect because the 11th Schedule doesn`t define powers between the Union and the State Legislatures. This is associated with the 7th Schedule.

Option 2 is correct. The 11th Schedule provides for the devolution of powers and responsibilities to the panchayats to prepare plans for economic development and social justice concerning 29 matters listed in the schedule, hence it is all about the State Legislatures and the Panchayat.

Option 3 is incorrect because these powers are not distributed between the Municipal Corporation and the Panchayat. The management of urban areas is generally the purview of municipal corporations, covered under the 12th Schedule.

Option 4 is also incorrect as the 11th Schedule does not distribute powers between the Gram Sabha and the Panchayat. The Gram Sabha is a key part of the Panchayat Raj system and is not considered separately in terms of power distribution.