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The question asks about the Union Territory with the highest female literacy rate. Let`s evaluate each option to determine the correct answer.
Option 1: Chandigarh. This Union Territory is known for its high literacy rates. While it does have a significant female literacy rate, it is not the highest.
Option 2: Lakshadweep. This Union Territory has the highest female literacy rate among all the options. Therefore, it is the correct answer.
Option 3: Andaman and Nicobar Islands. While this Union Territory may have a respectable female literacy rate, it is not the highest among the options.
Option 4: Puducherry. While Puducherry may have a relatively high female literacy rate, it is not the highest among the given options.
In conclusion, the Union Territory with the highest female literacy rate is Lakshadweep.