Option 1: 1961 - This is not the correct answer. Nagaland was not created as a separate state in 1961.

Option 2: 1962 - This is not the correct answer either. Nagaland was not created as a separate state in 1962.

Option 3: 1963 - This is the correct answer. Nagaland was created as a separate state in 1963. It became the 16th state of the Indian Union on December 1, 1963. This decision was based on the demand of the Naga people for self-determination and their distinct cultural, social, and linguistic identity.

Option 4: 1964 - This is not the correct answer. Nagaland was not created as a separate state in 1964.

In conclusion, the correct year in which Nagaland was created as a separate state is 1963.