Step 1: Statement I
Sporozoites injected by a female Anopheles reach the liver cells. They multiply asexually there to give merozoites, so Statement I is true.
Step 2: Statement II
The gametes fuse and the zygote forms inside the mosquito's gut, not in human erythrocytes. The zygote becomes a motile ookinete and then an oocyst on the gut wall. So Statement II is false.
Step 3: Conclusion
Statement I is correct but Statement II is incorrect.
Final Answer:
Statement I is correct and Statement II is incorrect.
\[ \boxed{\text{(C) }\text{Statement I is correct but statement II is incorrect}} \]