The correct option is 2 only
Explanation
The Pala School of Art, often referred to as the Eastern Indian School of Medieval Art, developed in the regions of Bengal and Bihar. It is historically significant for producing the earliest examples of miniature paintings in India, primarily in the form of illustrated palm-leaf manuscripts depicting Buddhist themes.
Statement 1 is Incorrect:
The Pala School flourished roughly between the 8th and 12th centuries A.D. Most of the surviving illustrated manuscripts, such as the Astasahasrika Prajnaparamita, date to the later part of this period, specifically the 11th and 12th centuries.
Statement 2 is Correct:
The school was patronised by the Pala dynasty (and later the Senas) of Eastern India. The Rashtrakuta dynasty was a contemporary power based in the Deccan region and was not the patron of the Pala School.
Statement 3 is Incorrect:
The chronology is reversed in this statement. The Gupta Empire (approx. 4th to 6th century A.D.) predates the Pala dynasty. The Pala School emerged long after the decline of the Guptas. It met its decline in the 13th century following the destruction of Buddhist monasteries (like Nalanda and Vikramshila) by Muslim invaders.
Key Takeaway:
The Pala School represents the genesis of the miniature painting tradition in India, characterised by Vajrayana Buddhist imagery on palm leaves, flourishing in Eastern India from the 8th to the 12th century.