India - Nadhya Pradesh Agricultural : Credit 0391 - Credit Agreement - Conformed

CONFORMED COPYY CREDIT NUMBER 391 IN Development Credit Agreement (Madhya Pradesh Agricultural Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 8, 1973 CONFORMED COPY CREDIT NUMBER 391 IN Development Credit Agreement (Madhya Pradesh Agricultural Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 8, 1973 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 8, 1973, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Schedult 2 to this Agreement by extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between the Association and The State of Madhya Pradesh acting by its Governor (hereinafter called Madhya Pradesh), Madhya Pradesh has agreed to undertake certain obligations in respect of the carrying out of the Project; (C) By an agreement of even date herewith between the Association, the Agricultural Refinance Corporation and the Madhya Pradesh State Cooperative Land Development Bank, Limited, certain obligations in respect of the carrying out of the Project have been undertaken by the Agricultural Refinance Corporation and the Madhya Pradesh State Cooperative Land Development Bank, Limited; and (D) The Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon terms and conditions hereinafter set forth. NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Section 5.01 is deleted; 4 (b) Section 6.02(h) is deleted and Section 6.02(i) becomes 6.02(h); (c) In Section 2.01, the following paragraph is substituted for paragraph 5: "5. The term "Borrower" means India, acting by its President." Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Madhya Pradesh" means the State of Madhya Pradesh acting by its Governor, a State of India, or any successor thereof. (b) "ARC" means Agricultural Refinance Corporation, a statutory corporation established and organized under the laws of the Borrower. (c) "LDB" means Madhya Pradesh State Cooperative Land Development Bank, Limited, a cooperative society established and organized under the laws of Madhya Pradesh. (d) "CGWB" means the Central Groundwater Board established by the Government of India. (e) "DTGS" means the Directorate of Tubewells and Groundwater Surveys established by Madhya Pradesh. (f) "Project Agreement" means the agreement of even date herewith between the Association, ARC and LDB, and all schedules thereto, as the same may be amended from time to time. (g) "Madhya Pradesh Agreement" means the agreement of even date herewith between Madhya Pradesh and the Association, as the same may be amended from time to time. (h) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursuant to Section 3.01(c) hereof, and all schedules thereto, if any, as the same may be amended from time to time with the approval of the Association. 5 (i) "Beneficiary" means (i) any person or enterprise carrying out farm custom work in the territory of Madhya Pradesh, or (ii) any farmer, group of farmers or cooperative farming society carrying out farm work in the territory of Madhya Pradesh which is eligible to receive an Agricultural Loan. (j) "Agricultural Loan" means any loan made or proposed to be made to a Beneficiary and to be financed out of the proceeds of the Credit. (k) "Participating Bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act, 1934, which has entered into an agreement with ARC in accordance with Section 2.02(c) of the Project Agreement. (1) "Primary Bank" means any Primary Land Development Bank which is a member of LDB and which has entered into an agreement with LDB in accordance with Section 2.03 of the Project Agreement. (m) "Project Area" means the 35 districts named in paragraph I of Schedule I to the Project Agreement and therein referred to as "Project Districts". ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to thirty-three million dollars ($33,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed under the Development Credit Agreement; providect however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. 6 Section 2.03. The Closing Date shall be December 31, 1976 or such other date as shall be agreed between the Borrower and the Association. Section 2.04. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.05. Service charges shall be payable semi-annually on February I and August I in each year. Section 2.06. The Borrower shall repay the principal amount of t;e Credit in semi-annual installments payable on each February 1 and August I commencing August 1, 1983 and ending February 1, 2023, each installment to and including the installment payable on February 1, 1993 to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.07. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project, or cause it to be carried out, with due diligence and efficiency and in conformity with sound administrative, agricultural and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction upon any of the obligations of the BoVrower set forth in paragraph (a) of this Section, if for any reason, the equipment listed in Part B of Schedule 2 to this Agreement is not available in the territories of the Borrower, then the Borrower shall, on the request of Madhya Pradesh, take all action required to ensure the prompt importation of such equipment and in respect of each consignment of such equipment, spare parts for such equipment in an amount sufficient to ensure an adequate supply of spare parts during the execution of the Project. (c) The Borrower shall enter into a Subsidiary Loan Agreement on terms and conditions (including inter alia those set forth in Schedule 3 to this Agreement) satisfactory to the Association for the purpose of relending to ARC for relending 7 to LDB and Participating Banks the equivalent of the proceeds of the Credit in respect of Categories I and 11 of the allocation of the proceeds of the Credit set forth in Schedule I of this Agreement. The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and th, Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (d) Except as the Association may otherwise agree, the operating policies and procedures and relending terms and conditions for the carrying out of the Project shall be as set forth in Schedules 1 and 2 to the Project Agreement. Section 3.02. The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable (i) Madhya Pradesh to perform all its obligations under the Madhya Pradesh Agreement, and (ii) ARC and LDB to perform their obligations under the Project igreement, and shall not take or permit any of its agencies to take any action which would prevent or interfere with the performance of any such obligations of ARC and LDB. Section 3.03. Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. Upon request from Madhya Pradesh, the Borrower shall assign five hydrogeologists from CGWB to DTGS and maintain such hydrogeologists with DTGS until the Project is completed. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause ARC and LDB to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition. (b) The Borrower shall cause ARC and LDB to: (i) establish and maintain separate accounts in respect of all funds disbursed and received on account of the Project: (ii) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association: (iii) furnish to the Association as soon as available, and, except as the Association shall otherwise agree, not later 8 tktMn four months after the end of each such year (A) certified copies of their fin.ncial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iv) furnish to the Association such other information concerning their accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Consultation, Information and Inspection Section 5.01. The Borrower and the Association shal. cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by Madhya Pradesh of its obligations under the Madhya Pradesh Agreement, the performance by ARC and LDB of their obligations under the Project Agreement, the administration, operations and financial condition of ARC and LDB and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower, including its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political subdivision. Section 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the administration, operations and financial condition of ARC, LDB and Madhya Pradesh, and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out any part of the Project. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obligations under the Development 0< 9 Credit Agreement, the performance by Madhya Pradesh of its obligations under the Madhya Pradesh Agreement, the performance by ARC of its obligations under the Project Agreement and the Subsidiary Loan Agreement, or the performance by LDB of its obligations under the Project Agreement. Section 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions Section 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed under the laws of the Borrower or laws in effect in its territories. Section 6.02. The Development Credit Agreement, the Madhya Pradesh Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. Section 6.03. The payment of the principal of, and service charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association Section 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continuance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any such declaration such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. Section 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: 10 (a) Madhya Pradesh shall have failed to perform any of its obligations under the Madhya Pradesh Agreement; ARC or LDB shall have failed to perform any of their respective obligations under the Project Agreement; or ARC shall have failed to perform any of its obligations under the Subsidiary Loan Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that (i) Madhya Pradesh will be able to perform its obligations under the Madhya Pradesh Agreement, or (ii) ARC or LDB will be able to perform their respective obligations under the Project Agreement, or (iii) ARC will be able to perfonn its obligations under the Subsidiary Loan Agreement. (c) ARC or LDB shall have become unable to pay any of their debts as they mature or any action or proceeding shall have been taken by ARC or LDB or by others whereby any of the property of ARC or LDB shall or may be distributed among its creditors. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC or LDB or for the suspension of their operations. Section 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in Section 7.02 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower and the defaulting party. (b) any event specified in paragraphs (c) or (d) of Section 7.02 of this Agreement shall occur. ARTICLE VIII Effective Date; Termination Section 8.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01(b) of the General Conditions. (a) The Project Agreement has been duly executed and delivered on behalf of ARC and LDB and has been duly authorized or ratified by all necessary corporate and governmental action. 11 (b) The Subsidiary Loan Agreement mentioned in Section 3.01(c) hereof has been duly executed and delivered on behalf of the Borrower and ARC and has been duly authorized or ratified by all necessary corporate and governmental action. (c) The Madhya Pradesh Agreement has been duly executed and delivered by Madhya Pradesh and has been duly authorized or ratified by all necessary governmental action. (d) A banking development plan to ensure adequate banking arrangements for the Project, satisfactory to the Association, has been implemented through appropriate legal and administrative action. Section 8.02. The following are specified as additional matters, within the meaning of Section 10.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC and LDB respectively, and constitutes a valid and binding obligation of ARC and LDB in accordance with its terms. (b) That the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARC, respectively, and constitutes a valid and binding obligation of the Borrower and ARC in accordance with its terms. (c) That the Madhya Pradesh Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Madhya Pradesh and constitutes a valid and binding obligation of Madhya Pradesh in accordance with its terms. Section 8.03. The date September 30, 1973 is hereby specified for the purposes of Section 10.04 of the General Conditions. Section 8.04. On termination of the Project Agreement in accordance with its terms, the obligations of the Borrower with respect to the Project shall forthwith terminate. 12 ARTICLE IX Representative of the Borrower; Addresses Section 9.01. Any Secretary, Additional Secretary or Joint Secretary to the Government of India in the Ministry of Finance of the Borrower or the Director/Deputy Secretary of the Department of Economic Affairs in the Ministry of Finance of the Borrower, acting singly, is designated as representative of the Borrower for the purposes of Section 9.03 of the General Conditions: Section 9.02. The following addresses are specified for the purposes of Section 9.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. 13 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ E. Gonsalves Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ I.P.M. Cargill Regional Vice President Asia 14 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of amounts of the Credit to each Category and the percentage of eligible expenditures so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed I. Loans for minor 31,500,000 63% of local ex- irrigation penditures II. Loans for land 1,500,000 63% of local ex- development penditures TOTAL 33,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods produced in, or services supplied from, the territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the tern "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of: (a) expenditures prior to the date of this Agreement; and 15 (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importation, manufacture, procurement or supply thereof. To the extent that the amount represented by the percentage set forth in the third column of the table in paragraph I above in respect of any Category would exceed the amount payable net of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes. 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in paragraph I above, if the estimate of the expenditures under any Category shall decrease, the amount of the Credit then allocated to such Category and no longer required therefor will be reallocated by the Association (subject, however, to the requirements for contingencies, as determined by the Association, in respect of any other Category or Categories) by increasing correspondingly the amount allocated to Categories I and/or II and the Association may increase (up to a maximum of 100% net of taxes) correspondingly the percentage applicable to Categories I and/or II. 5. Notwithstanding the percentages set forth in the third of the table in paragraph I above or the provisions of paragraph 4 above, if the estimate of local expenditures under Category I or II shall increase, and no proceeds of the Credit are available for reallocation to such Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 16 SCHEDULE 2 Description of the Project The Project, which is part of a lending program for agricultural development in Madhya Pradesh, consists of: A. A three year program to finance loans for minor irrigation, including the construction and improvement of dugwells and the installation, of pumpsets and Persian wheels on dugwells and land development for Beneficiaries through Primary Banks and Participating Banks, the said loans being refinanced in accordance with the terms and conditions of Schedule 3 to this Agreement and with the Project Agreement. B. The provision of following well-drilling equipment, including spare parts: pneumatic boring drills together with compressors. The Project is expected to be completed by June 30, 1976. 17 SCHEDULE 3 Principal Terms of Relending Agreements The following sets forth the principal terms and conditions under which part of the proceeds of the Credit or the equivalent thereof shall be lent to ARC by the Borrower: Lending terms to ARC from the Borrower (a) In respect of ARC refinancing not exceeding nine years: (i) interest rate of not less than 5-1/2% per annum less 1/4% per annum for prompt payment; (ii) repayment at the end of nine years; (b) In respect of ARC refinancing in excess of nine but not exceeding 15 years: (i) interest rate of not less than 6% per annum less 1/4% per annum for prompt payment; (ii) repayment at the end of 15 years. (c) The Borrower shall bear the foreign exchange risk.