India - Rajasthan Dairy Development Project : Credit 0521 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 521 IN Development Credit Agreement (Rajasthan Dairy Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 18, 1974 CONFORMED COPY CREDIT NUMBER 521 IN Development Credit Agreement (Rajasthan Dairy Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED DECEMBER 18, 1974 S DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated December 18, 1974, 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 Schedule 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 Rajasthan acting by its Governor (hereinafter called Rajasthan), Rajasthan 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 and the Agricultural Refinance Corporation, certain obligations in respect of the carrying out of the Project have been undertaken by the Agricultural Refinance Corporation; 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 March 15, 1974, 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) In Section 2.01, the following paragraph is substituted for paragraph 5: "5. The term Borrower means India, acting by its President."; 4 (b) Sub-paragraph (i) of paragraph (a) of Section 9.01 is deleted and the following sub-paragraph (i) is substituted therefor: "'exchange views through their representatives with regard to the progress of the Project, the benefits derived therefrom and the performance of their respective obligations under the Development Credit Agreement, the performance by the parties to the Rajasthan Agreement and to the Project Agreement of their respective obligations under the said agreement." 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) "Rajasthan" means the State of Rajasthan 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 Rajasthan State Cooperative Land Development Bank, Limited, a cooperative society established and organized under the laws of Rajasthan. (d) "RSCB" means Rajasthan State Cooperative Bank, a cooperative society established and organized under the laws of Rajasthan. (e) "Project Agreement" means the agreement of even date herewith between the Association and ARC, and all schedules thereto, as the same may be amended from time to time. (0 "Rajasthan Agreement" means the agreement of even date herewith between Rajasthan and the Association, as the same may be amended from time to time. (g) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursuant to Section 3.01(b) hereof, and all schedules thereto, if any, as the same may be amended from time to time. (h) "Loan" means any loan made or proposed to be made to a Beneficiary and to be financed out of the proceeds of the Credit. (i) "Beneficiary" means (i) any DCS, (ii) any Union, or (iii) RDDC. 5 (j) "Participating Banks" means LDB, RSCB and the banks listed in the Second Schedule to the Reserve Bank of India Act, 1934, which have entered into an agreement with ARC in accordance with Section 2.03 of the Project Agreement. (k) "RDDC" means Rajasthan Dairy Development Corporation, a corporation to be established under the laws of the Borrower. (1) "Category" means a category of the allocation of proceeds of the Credit set forth in Schedule 1 to this Agreement. (m) "BVVI" means the Biological Veterinary Vaccine Institute, established in the Government of Rajasthan. (n) "CVAS" means the College of Veterinary and Animal Sciences, an educational institution established under the laws of Rajasthan. (o) "DCS" means the dairy cooperative societies, v.tablished under the laws of Rajasthan, as set forth in Section 2.12(a) of the Rajasthan Agreement. (p) "Union" means the Milk Producers' Unions to be established as cooperative societies under the laws of Rajasthan as set forth in Section 2.13(a) of the Rajasthan Agreement. (q) "Project Area" means the milk sheds in Eastern Rajasthan, wholly or partially in the districts of Jaipur, Ajmer, Alwar, Bharatpur, Sawai-Madhopur and Tonk. (r) "Rs" means rupees in the currency of the Borrower. 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 twenty-seven million seven hundred thousand dollars ($27,700,000). 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 may be amended from time to time, for expenditures made (or. 6 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 out of the proceeds of the Credit. Section 2.03. (a) Except as the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions set forth or referred to in Schedule 1 to the Rajasthan Agreement. (b) When, with respect to any contract for goods described in paragraph (a) above, the lowest evaluated bid falls under Group C (as defined in paragraph B.2(b) of Schedule 1 to the Rajasthan Agreement), the Borrower shall immediately grant permission to import the goods covered by the contract, and no reviews of such permission to import shall be made by the Borrower or by any of its agencies, and all foreign exchange required therefor shall be promptly made available. When, with respect to any contract, the lowest evaluated bid falls under Group A or under Group B (as defined in paragraph B.2(b) of Schedule I to the Rajasthan Agreement), the Borrower shall (i) promptly upon receipt of the appropriate applications, issue, or cause to be issued, such import licenses as shall be required to implement the contract; (ii) make available, or cause to be made available, promptly as needed, all foreign exchange which shall be required therefor; and (iii) with respect to locally produced materials which are subject to allocation, make, or cause to be made, allocations of such materials promptly and in such quantities as shall be required for such contract. Section 2.04. The Closing Date shall be December 31, 1982 or such other date as 6hall be agreed between the Borrower and the Association. Section 2.05. 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 2.06. Service charges shall be payable semi-annually on January 1 and July 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each January 1 and July 1 commencing January 1, 1985 and ending July 1, 2024, each installment to and ncluding the installment payable on July 1, 1994 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. 7 Section 2.08. 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) The Borrower shall enter into a Subsidiary Loan Agreement with ARC 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 to the Participating Banks the equivalent of the proceeds of the Credit under Categories 1(a), 2 and 3(a). The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purpose 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. (c) In order to assist Rajasthan in carrying out Parts Bl, C, D and E of the Project, the Borrower shall make available to Rajasthan the proceeds of the Credit tinder Categories 1(b), 3(b), 3(c), 4, 5 and 6. 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) Rajasthan to perform all its obligations inder the Rajasthan Agreement; (ii) ARC to perform its obligations under the Project Agreement, 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. 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. It is the mutual intention of the parties to this Agreement that after the Unions and the DCS are established and operational: (i) the DCS own at least 75% of the shares of the Unions of which they are members; and (ii) that the Unions own at least 75% of the shares of RDDC. To this end, except as the Association shall otherwise agree: 8 (a) the Borrower shall offer and cause Rajasthan to offer, each to sell not less than 75% of its shares of RDDC, at par value, to the Unions, not later than January 1, 1980; (b) the Borrower shall offer and cause Rajasthan to offer, each to sell not less than 75% of its shares of the capital of each Union, at par value, to the DCS members of such Unions, not later than January 1, 1980; and (c) these offers shall be made each year until the objectives stated in Section 3.04(i) and (ii) of this Agreement have been attained. Section 3.05. The Borrower shall make available, and cause Rajasthan to make available, equity financing required to ensure that RDDC and the Unions qualify for loans from Participating Banks. Section 3.06. The Borrower shall ensure, and cause Rajasthan to ensure, that RDDC and the Unions are served by the optimum number of Participating Banks selected in consultation with ARC. Section 3.07. The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable Rajasthan to establish and operate a calf-rearing subsidy program in the Project Area. Section 3.08. The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable Rajasthan to establish in the Project Area, and operate with full use of the expertise of CVAS, a health program for crossbred cattle which shall include: (i) the diagnostic laboratory described in Part Cl of the Project; and (ii) the vaccine institute described in Part C2 of the Project. Section 3.09. The Borrower shall take all steps necessary to ensure that consultants acceptable to the Association, recruited upon terms and conditions satisfactory to the Association, will be employed by RDDC to assist the Unions in dairy plant engineering, dairy marketing, dairy processing engineering, mass-media communications and forage/animal production. Section 3.10. The Borrower shall ensure the requisite availability of loans under existing or new lending arrangements to eligible members of the DCS for minor irrigation for forage production. Section 3.11. The Borrower shall ensure, and cause Rajasthan to ensure, that not later than January 1, 1982, the future role and status of RDDC is reviewed with the Association. 9 ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) Rajasthan shall have failed to perform any of its obligations under the Rajasthan Agreement; (b) ARC shall have failed to perform any of its obligations under the Project Agreement or the Subsidiary Loan Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that (i) Rajasthan will be able to perform its obligations under the Rajasthan Agreement, or (ii) ARC will be able to perform its obligations under the Project Agreement or under the Subsidiary Loan Agreement; (d) ARC, RDDC, or the Unions shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC, RDDC, the Unions or by others whereby any of the property of ARC, RDDC or the Unions shall or may be distributed among its creditors; (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC or RDDC or any Union or for the suspension of the operations of ARC or RDDC or such Union. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in paragraphs (a) and (b) of Section 4.01 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 (b) any event specified in paragraphs (d) and (e) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: 10 (a) The Project Agreement has been duly executed and delivered on behalf of ARC and has been duly authorized or ratified by all necessary corporate and governmental action. (b) The Subsidiary Loan Agreement 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 Rajasthan Agreement has been duly executed and delivered by Rajasthan and has been duly authorized or ratified by all necessary governmental action. (d) RDDC has been duly established under the laws of the Borrower and under a Memorandum and Articles of Association satisfactory to the Association, and a Managing Director of RDDC has been appointed. (e) The qualifications and experience of the Managing Director of RDDC shall conform to the standards agreed to by the Borrower, Rajasthan and the Association. (f) The Borrower has subscribed to equity shares of RDDC in an amount of not less than Rs.390,000 and has purchased for cash such shares in an amount of not less than Rs.300,000. (g) Rajasthan has (1) subscribed to equity shares of RDDC in an amount of not less than Rs.390,000 and purchased for cash such shares in an amount of not less than Rs.300,000, and (ll) subscribed to redeemable shares of RDDC in an amount of not less than Rs.550,000 and purchased for cash such shares in an amount of not less than Rs.505,000. (h) RDDC has made the arrangements satisfactory to the Association referred to in Section 2.18 of the Rajasthan Agreement. (i) RDDC has recruited the RDDC Divisional Manager for Institutional Development, Livestock Development and Engineering, and recruited consultants for dairy plant engineering, mass-media communications and forage/animal production. (j) Loan agreements satisfactory to the Association have been concluded by ARC and Participating Banks. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Proicct Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC and is legally binding upon ARC 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, is legally binding upon the Borrower and ARC in accordance with its terms; and (c) That the Rajasthan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Rajasthan and is legally binding upon Rajasthan in accordance with its terms. Section 5.03. The date May 15, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Sections 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary. Joint Secretary, Director or Deputy Secretary to the Government of India in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 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 12 For the Association: International Development Association 1818 H Screet, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s / T. N. Kaul Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mervyn L. Weiner Regional Vice President South Asia 13 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 the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 1. Civil Works 70% (a) for Parts A, 5,050,000 B2 and B3 of the Project (b) for Parts Cl 320,000 and C2 of the Project 2. Equ%<pment and ma- 6,870,000 100% of foreign terials procured expenditures by international (c.i.f.) and competitive bid- 100% of local ding for Parts A, expenditures B2 and B3 of the (ex-factory) Project 3. Equipment and ma- 70% terials procured locally under pro- cedures other than international com- petitive bidding (a) for Parts A, 5,930,000 B2 and B3 of the Project (b) for Parts C. 810,000 and C2 of the Project (c) for Part C3 of 370,000 the Project 14 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 4. Imported cattle, 120,000 100% of foreign semen and related expenditures equipment (c.i.f.) 5. (a) Training and 1,890,000 80% Extension programs under Part Dl of the Project (b) Training programs 50,000 80% under Part D2 of the Project 6. Consultants' Ser- 790,000 100% vices and Over- seas fellowships 7. Unallocated 5,500,000 TOTAL 27,700,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures for goods or services supplied from, the territory, and in the currency, of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower, and for goods or services supplied from, the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if any event occurs which shall affect the amount of any such taxes included in the cost of any item to be financed out of the proceeds of the Credit, the Association may, by notice to the Borrower, correspondingly adjust the disbursement percentage then applicable to such item. 15 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement, except for expenditures under Category 5(b) relating to training incurred after June 5, 1974 for the preparation of the Project in an amount not to exceed $50,000. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph I above: (a) if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower (i) reallocate to such Category to the extent required to meet the estimated shortfall proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) with respect to Categories 1, 3 or 5, if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and (b) if the estimate of expenditures to be made under any Category shall decrease, the Association may by notice to the Borrower re-allocate the amount of such Category no longer required therefor to any other Category. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. 16 SCHEDULE 2 Description of the Project The Project is an integrated program intended to increase the production of milk in rural areas of Rajasthan through the development of village dairy cooperative societies and unions thereof. The Project consists of the following Parts: A. Dairy Plants and Feed Mills 1. A phased program for the design, construction and subsequent expansion of four dairy plants at Jaipur, Alwar, Bharatpur and Sawai-Madhopur/Tonk and the expansion of an existing dairy plant at Ajmer. 2. A phased program for the design and construction of five cattle feed mills at Jaipur, Ajmer, Alwar, Bharatpur, Sawai-Madhopur/Tonk. B. Cattle Breeding 1. The importation of exotic purebred cattle, frozen semen and related equipment. 2. The establishment of a breeding farm for exotic bulls. 3. The establishment of five bull farms (Artificial Insemination Centers), animal health services and related facilities. C. Supporting Activities 1. The establishment of one fully equipped diagnostic laboratory. 2. The establishment of a new facility for the production of veterinary vaccines. 3. The purchase and utilization of equipment for the DCS. D. Training and Extension 1. The establishment and operation of five Union Training Centers with related equipment and extension programs for the Project. 17 2. The training of Project personnel at local institutions. E. Consultants and fellowships 1. The provision of consultants' services to assist RDDC in implementing the Project. 2. The provision of fellowships abroad for Union key personnel. The Project is expected to be completed by December 31, 1981. 18 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement A. Annual interest rate of not less than 7-3/4% less 1/4% for prompt repayment. B. Repayment at the end of 15 years. C. The exchange risk to be for the account of the Borrower.