Step 1: Recall that Section 3(2) of the Environment (Protection) Act, 1986 does not state one broad power, it lists a numbered sequence of specific powers, each under its own sub-clause.
Step 2: Place the four options in the order they typically appear in that sequence: coordinating State actions, planning and executing nationwide pollution-control programmes, laying down environmental quality standards, restricting industrial siting, collecting and circulating pollution information, and carrying out research.
Step 3: Locate clause (ii) specifically in that sequence. It corresponds to the function of collecting and disseminating information relating to environmental pollution, distinct from the research clause and the standard-setting clause that come elsewhere in the list.
Step 4: Match this against the four options given. Only the option describing collection and dissemination of information lines up with clause (ii); the others describe real but differently numbered clauses. The correct option is collection and dissemination of information in respect of matters relating to environmental pollution.