Read the given paragraph carefully and answer the following question.

The clustered rural settlement is a compact or closely built up area of houses. In this type of village the general living area is distinct and separated from the surrounding farms, barns and pastures. The closely built-up area and its intervening streets present some recognisable pattern or geometric shape, such as rectangular, radial, linear, etc. Such settlements are generally found in fertile alluvial plains and in the northeastern states. Sometimes, people live in compact village for security or defence reasons, such as in the Bundelkhand region of central India and in Nagaland. In Rajasthan, scarcity of water has necessitated compact settlement for maximum utilisation of available water resources. Fragmented settlement type may result from segregation of a large compact village or from the tendency of clustering in a restricted area of dispersed settlements.

Dispersed or isolated settlement pattern in India appears in the form of isolated huts or hamlets of few huts in remote jungles, or on small hills with farms or pasture on the slopes. Extreme dispersion of settlement is often caused by extremely fragmented nature of the terrain and land resource base of habitable areas. Many areas of Meghalaya, Uttarakhand, Himachal Pradesh and Kerala have this type of settlement.

Which of the following statement is NOT correct with reference to features of clustered settlements?

It is generally found in hilly areas.

The correct answer is Option (3) → It is generally found in hilly areas.

The passage mentions that clustered settlements are generally found in fertile alluvial plains and the northeastern states, not in hilly areas. Dispersed settlements, on the other hand, are associated with hilly areas. Hence, the statement "It is generally found in hilly areas" is NOT correct with reference to clustered settlements.