Statement I is incorrect but statement II is correct as a recombinant DNA is inserted within the coding sequence of an enzyme, β-galactosidase. This results into inactivation of the gene for synthesis of this enzyme. Thus, presence of insert results into insertional inactivation of the β-galactosidase gene and the colonies do not produce any colour and identified as recombinant colonies. Whereas non-recombinant transformants will produce blue colour in presence of chromogenic substrate.