The given question is about matching authors with their corresponding books. Here`s a breakdown of why Option 1 is correct:

A. V.S. Naipaul is correctly matched with `2. In a Free State`. It is one of his most famous works, for which he received the Booker Prize in 1971.

B. Salman Rushdie is correctly paired with `3. Midnight’s Children`. This book won the Booker Prize in 1981, and it is often considered his most significant novel.

C. Paul Scott wrote `4. Staying On`, a novel which won the Booker Prize in 1977. This match is accurate.

D. `1. The Siege of Krishnapur` was written by J.G. Farrell. This novel is part of his Empire Trilogy and won the Booker Prize in 1973.

Options 2, 3, and 4 incorrectly match the authors with books not written by them, hence they are invalid. Therefore, Option 1 is the correct answer.