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The correct answer is option 2: recommendations for tax reforms.
Dissection of all options:
Option 1: The Kelkar proposals were not about reforms in the power sector, hence, this choice is incorrect.
Option 2: The Kelkar committee, under the leadership of Vijay Kelkar, was appointed by the Indian Government to propose tax reforms. This committee`s proposals, known as the Kelkar proposals, focused on tax reforms, making this option the correct answer.
Option 3: While privatization may involve taxation issues, the Kelkar proposals specifically addressed tax reforms, not privatization guidelines. Thus, this option is incorrect.
Option 4: The Kelkar proposals did not concern environmental matters such as reducing vehicular pollution or promoting CNG use. Their emphasis was on tax policy, so this choice is also incorrect.
Concisely, the Kelkar proposals were meant to recommend tax reforms, making option 2 the correct answer.