Choose the grammatically correct sentence:

The correct answer is Option (2) → Meera deserves the first prize for all the hard work she has put in this year.

Verbs of state are not used in the continuous form:

• Some verbs show a state, not an action: deserve, consist, prefer, possess, own. A state is a fact that stays true. It is not something going on at a moment.
• So these verbs take the simple form, not “is / are + -ing”. This sentence uses the simple present “deserves”, which is right.

Why the Other Options are Incorrect?

Option 1: Our school band is consisting of twelve drummers and four flute players. — Incorrect. The given sentence says “is consisting of”. “Consist of” tells what something is made up of. That is a state, so it is not used in the continuous form.
Corrected: Our school band consists of twelve drummers and four flute players.

Option 3: Many of my classmates are preferring printed notes to notes on the phone. — Incorrect. The given sentence says “are preferring”. “Prefer” shows a liking, which is a state, not an action.
Corrected: Many of my classmates prefer printed notes to notes on the phone.

Option 4: The old temple in our village is possessing a brass bell that is two hundred years old. — Incorrect. The given sentence says “is possessing”. “Possess” means to own or have. Owning is a state, not an action.
Corrected: The old temple in our village possesses a brass bell that is two hundred years old.