The Narasimham Committee for Financial Sector Reforms recommended a reduction in Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), and Priority Sector Financing.

Option 1 only mentions SLR and CRR, but not Priority Sector Financing - this is inaccurate because the committee suggested reduction of all three.

Option 3 lists SLR and Financing to capital goods sector, while Financing to capital goods sector was not a recommendation from the Narasimham Committee, and it misses the CRR and Priority Sector Financing.

Option 4 suggests a reduction in CRR, Priority Sector Financing and Financing to capital goods sector, but again, the reduction in Financing to capital goods sector was not a recommendation made by the committee.

The correct answer is Option 2 because it accurately reflects the recommendations of the Narasimham Committee in relation to SLR, CRR and Priority Sector Financing.