NEW DELHI, July 10: A Rs 2,216-crore World Bank assistance sought by the Tea Board, as part of its Rs 3,300-crore project for all round development of the tea sector, has been reportedly held back following differences between the government and the funding agency.

According to industry sources: ``The government and the World Bank have opposite views on the way the funds to be doled out are going to be used, which has forced the latter to hold back the credit''. Though the Tea Board has stated that the financial assistance would help development of the tea sector, the loan is being primarily sought to increase the crop production to 1,000 million kg in the country, the sources said.

A project study submitted by the Tea Board had said the assistance would help India in achieving this production target in the next five years, out of which 250 million kg would be exported and rest consumed domestically. The World Bank has, however, differed with the perspective, saying there would be no point in aggressively pursuing the production strategy without a proper assessment. ``The World Bank is clear in its perspective. It does not want to fund production. It is ready to extend finance only if the quality of life improves'' the sources said.

The World Bank has been mainly insisting on improving human resources, infrastructure, training, management and research mangement and in order to satisfy the requirements five commissions were set up to come up with reports on these subjects during the second half of 1995.

The committees were set up after a World Bank appraisal team visited the country during June 1995 and put forth its views to the government. The committees had prepared the report and given to the government but nothing had been heard about it, the sources said. A commerce ministry officialsaid that these five committees had looked into the different aspects of funding and submitted the report, which had been sent to the World Bank. ``We have sent the report to the World Bank but have not heard after that'', the said.An international funding agency source said no progress had been made beyond the Indian Tea Board's request for the loan. ``India had sought loan and a team came to assess the needs. But we don't think anything further is happening'', the sources said.

Industry sources said the bank was correct in raising questions on proper assessment and its fears were raised in view of falling tea exports in the country.

``If the export target is not reached, it will lead to a glut of the commodity in the domestic market and as a result lead to sharp fall in prices. This is exactly what the bank does not want'', they said.

Even the Food and Agricultural Organisation (FAO) had warned India that there was no point in trying to achieve such a production target. Yet another point raised by the bank is the rate of interest at which the funds would be extended to the planters.

The funding was likely to be extended at a nominal interest of 3.25 per cent but when it ultimately handed over to the planters, it was expected to be in the region of 15-16 per cent.

``The World Bank is also not agreeable to this as it says it could impose a lot of pressure on the tea growers. Moreover, the growers themselves are not interested to get funds at such a high rate of interest'' they said.

Of the Rs 3,300 crore project, originally planned for 10 years but subsequently cut down to five years, the Tea Board planned to mobilise Rs 250 crore from financial institutions, Rs 125 crore on its own and Rs 750 crore from the industry itself, besides the loan from the World Bank.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.