The correct answer is option 1, which states that terracing and contour bunding and contour ploughing are suitable methods for soil conservation in hilly regions.

Terracing is the construction of steps or platforms on sloping land to create flat areas for farming. This method helps in reducing soil erosion by slowing down the surface water flow and preventing it from washing away the topsoil. Contour bunding involves constructing small banks along the contour lines of the land to prevent water runoff and retain soil moisture.

Contour ploughing is another effective method for soil conservation in hilly regions. It involves ploughing along the contour lines of the land, which helps in retaining water and reducing soil erosion by slowing down the flow of water downhill.

On the other hand, shifting cultivation, as mentioned in option 2, is not a suitable method for soil conservation. Shifting cultivation involves clearing a patch of land for cultivation, using it for a few years, and then moving on to a new patch of land. This practice leads to deforestation and soil degradation, which is detrimental to soil conservation efforts.

Hence, the suitable methods for soil conservation in hilly regions are terracing and contour bunding, as well as contour ploughing.