Step 1: Break the question into its two independent claims.
Statement I says land grading helps in unirrigated, rainfed areas because it lets rainwater spread and soak in evenly instead of pooling in low spots or running off from high spots. Statement II says land smoothing is the last step in the land levelling sequence. Since these are two separate claims joined together, each has to be checked on its own before combining them.
Step 2: Evaluate Statement I on its own merits.
In dryland farming there is no irrigation water to correct an uneven field, so any rainfall that lands unevenly is wasted, either ponding in depressions or draining away too fast on high spots. Grading the land to a uniform, gentle grade lets the same rainfall infiltrate evenly across the field, directly improving moisture conservation, so Statement I is true.
Step 3: Evaluate Statement II on its own merits.
Land levelling is normally carried out in stages, a rough cut and fill pass first to set the design grade, followed by a light finishing pass with a float or drag that knocks down the last few centimetres of ridges and fills shallow depressions. That finishing pass is called land smoothing, and it always comes after the main grading work, so it is correctly described as the final operation, making Statement II true as well.
Step 4: Combine the two findings.
Both individual checks came out true and neither statement depended on the other, so the option stating both are correct is the right choice.
\[ \boxed{Both Statement (I) and Statement (II) are correct.} \]