In the context of Indian history, the principle of 'Dyarchy (diarchy)' refers to

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This question was previously asked in

UPSC Civil Services (Prelims) General Studies Official Paper-I (Held In: 2017)

Answer 1

The correct answer is Division of the subjects delegated to the provinces into two categories.

The Montage-Chelmsford reforms 1919

Lord Chelmsford, the Viceroy, and Edwin Montagu, the Secretary of State, in 1918, introduced constitutional reforms which led to the enactment of the Government of India Act of 1919.
The Provincial Legislative Councils were enlarged and the majority of their members were to be elected.
Under the system of Dyarchy, the provincial governments were given more powers.
- Under Dyarchy some subjects, such as finance and law and order, remained under the direct control of the Governor and were called 'reserved' subjects;
- Other subjects, such as education, public health, and local self-government, were to be controlled by ministers responsible to the Legislatures and were called 'transferred' subjects.