STATEMENT-1 : The stream of water flowing at high speed from a garden hose pipe tends to spread like a fountain when held vertically up, but tends to narrow down when held vertically down. STATEMENT-2 : In any steady flow of an incompressible fluid, the volume flow rate of the fluid remains constant.

Step 1: Analyze Statement-2.

For a steady flow of an incompressible fluid, the volume flow rate $Q$ is constant.

$$Q = Av = \text{constant}$$

This is the equation of continuity, which relates cross-sectional area $A$ and velocity $v$.

$$A \propto \frac{1}{v}$$

Therefore, Statement-2 is TRUE.

Step 2: Analyze Statement-1.

When the hose is held vertically up, gravity decreases the velocity of the water.

$$v \downarrow$$

Since velocity decreases, the cross-sectional area must increase.

$$A \uparrow$$

When the hose is held vertically down, gravity increases the velocity of the water.

$$v \uparrow$$

Since velocity increases, the cross-sectional area must decrease.

$$A \downarrow$$

Therefore, Statement-1 is TRUE.

Step 3: Evaluate the relationship between the statements.

The change in the stream's area is caused by the change in velocity under gravity while maintaining a constant volume flow rate.

$$A = \frac{Q}{v}$$

Therefore, Statement-2 is the correct explanation for Statement-1.

Answer: Both Statement-1 and Statement-2 are true, and Statement-2 is the correct explanation for Statement-1.