India - Cashewnut Project : Credit 1012 - Credit Agreement - Conformed

- - CREDIT NUMBER 1012 IN Development Credit Agreement (Cashewnut Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 5 u L0 , 1980 CRZDIT NUMBER 1012 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated v (0 , 1980, between INDIA, acting by its President '(hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASOCIATION (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) Part A of the Project will be carried out by the Agri- cultural Refinance and Development Corporation with the Borrower's assistance and, as part of such assistance, the Borrower will make available to the Agricultural Refinance and Development Corpora- tion part of the proceeds of the Credit as hereinafter provided; (C) Part B of the Project will be carried out by the States of Andhra Pradesh, Karnataka, Kerala and Orissa with the Bor- rower's assistance and, as part of such assistance, the Borrower will make available to said States part of the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and the States of Andhra Pradesh, Karnataka, Kerala and Orissa, and with the ARDC Agreement between the Association and Agricultural Refinance and Development Corporation; 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 (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). - 2 - Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms -efined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Andhra Pradesh" means the State of Andhra Pradesh, a State of India, or any successor thereof; (b) "Karnataka" means the State of Karnataka, a State of India, or any successor thereof; (c) "Kerala" means the State of Kerala, a State of India, or any successor thereof; (d) "Orissa" means the State of Orissa, a State of India, or any successor thereof; (e) "Project States" mean collectively the States of Andhra Pradesh, Karnataka, Kerala and Orissa; (f) "ARDC" means Agricultural Refinance and Development Corporation, a statutory corporation established and organized under the laws of the Borrower, or any successor thereof; (g) "Project Area" means the districts of Srikakulam, Vizianagaram, Visakhapatnam, East Godavari, West Godavari, Krishna, Khammam, Prakasam, Nellore and Chittoor in Andhra Pradesh; the South Kannara district in Karnataka; the districts of Cannanore, Kozhikode, Mallapuram and Palghat in Kerala; and the districts of Balasore, Cuttack, Dhenkanal, Ganjam, Keonjhar, Mayurbhanj, and Puri in Orissa; (h) "Participating Bank" means any State Land Development or Mortgage Bank, State Couperative Bank, Regional Rural Bank or Commercial Bank making loans, which are, or are proposed to be refinanced by ARDC under the Project; (i) "State Corporations" mean collectively the Karnataka Cashew Development Corporation Limited, the Andhra Pradesh Forest Development Corporation Limited, the Plantation Corporation of Kerala Limited and the Orissa State Cashew Development Corporation Limited; - 3 - (j) "Project Agreement" means the agreement between the Association Pnd the Project States of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement; and (k) "Financial Arrangements" mean the arrangements to be made between the Borrower and ARDC pursuant to Section 3.02 (b) of this Agreement, as the same may be amended from time to time. 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 equiva- lent to twenty-two million dollars ($22,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Associa- tion, 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 out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions set forth or referred to in Section 2.02 of the Project Agreement. Section 2.04. The Closing Date shall be September 30, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. 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 semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each January 15 and July 15 commencing July 15, 1990, and ending January 15, 2030, each installment to and including the installment payable on January 15, 2000, 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 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out or cause to be carried out Part C of the Project with due diligence and efficiency and in conformity with appropriate administrative and financial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause the Project States and ARDC to perform in accordance with the provisions of the Project Agreement and the ARDC Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provi- sion of funds, facilities, services and other resources, necessary or appropriate to enable the Project States and ARDC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall relend $13,700,000 out of the pro- ceeds of the Credit to ARDC under Financial Arrangements to be entered into between the Borrower and ARDC under terms and condi- tions mutually agreed upon between the Borrower and the Association. (c) The Borrower shall exercise its rights under the Financial Arrangements in such manner as to protect the interests of the Borrower and the 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 Financial Arrangements or any provision thereof. - 5 - (d) The Borrower shall make $7,000,000 out of the proceeds of the Credit available to the Project States in accordance with the Borrower's standard arrangements for development assistance to the States of India. Section 3.03. The Borrower undertakes that the study to be prepared under Part C.2 of the Project shall commence by September 30, 1980 and a copy of the report arising from said study will be made available to the Association. Section 3.04. (a) The Borrower shall furnish or cause to be furnished to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for the Project, and any material modi- fications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain or cause to be main- tained records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable the Association's accredited represen- tatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall cause to be prepared and furnished to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execu- tion and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower, the Project States and the Association of their respec- tive obligations under the Development Credit Agreement and the Project Agreement, and the accomplishment of the purposes of the Credit. - 6 - Section 3.05. The Borrower shall, by September 30, 1980, furnish to the Association proposals for carrying out cashew research under Part C1 of the Project. Section 3.06. For the purpose of better coordination in implementation of the Project, the Borrower shall, by September 30, 1980, establish a Project Coordination Committee in its Ministry of Agriculture. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consis- tently maintained appropriate accounting practices the operations, resources and expenditures, in respect of Part C of the Project, of the departments or agencies of the Borrower responsible for carrying out Part C of the Project. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) any Project State shall have failed to perform any of its obligations under the Project Agreement; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement; (c) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC 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 disestablish- ment of ARDC or for the suspension of its operations; and (e) an extraordinary situation shall have arisen which shall make it improbable that: (i) any Project State will be able -7- to perform its obligations under the Project Agreement; or (ii) ARDC will b- able to perform its obligations under the ARDC Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any events specified in paragraphs (a) or (b) of Section 5.01 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 the Project States or ARDC, as the case may be; and (b) any events specified in paragraphs (c) or (d) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. 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 Project Agreement has been duly authorized by the Project States, and is legally binding upon each Project State in accordance with its terms; and (b) that the ARDC Agreement has been duly authorized or ratified by ARDC and is legally binding upon ARDC in accordance with its terms. Section 6.02. The date 4 " tO l&Z is hereby specified for the purposes of Section 12.04 of the General Condi- tions. Section 6.03. The provisions of paragraph (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. -8- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary or Under Secretary of the Department of Economic Affairs 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 7.02. The following addresses are specified for the purpose 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 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. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this - 9 - 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 4/ 4 Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President South Asia - 10 - SCHEDULE 1 Withdrawal of the Proceeds of t1ie 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 )f 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) Plantations (a) by farmers 5,700,000 55% of loans (b) by State 7,800,000 55% of loans Corporations (2) Civil works for Kerala 2,500,000 90% feeder roads (3) Staff salaries, 3,800,000 90% vehicles, equipment, operating costs and training for depart- mental support units (4) Orissa pilot scheme 300,000 90% (5) Research 1,150,000 90% (6) Study 150,000 100% (7) Unallocated 600,000 TOTAL 22,000,000 - 11 - 2. The disbursement percentages have been calculated in com- pliance 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 the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, except that, subject to the provisions of paragraph (b) immediately following, withdrawals in an aggregate amount not exceeding the equivalent of $200,000 may be made in respect of Categories (1) and (3) on account of payments made for such expenditures before that date but after December 1, 1979; and (b) subject to the provisions of paragraph (a) above, expenditures under Category (1) until the Financial Arrangements have been made. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, 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 expendi- tures; and (ii) 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. 5. 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 - 12 - expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way re- stricting 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 Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 13 - SCHEDULE 2 Description of the Project The Project is designed to help finance a program of cashew production in the States of Andhra Pradesh, Karnataka, Kerala and Orissa and consists of the following: Part A: 1. Implementation of a cashew planting and improvement program on about 35,000 hectares by farmers in the Project Area. 2. Implementation of a cashew planting and improvement program on about 26,000 hectares by the State Corporations, and construc- tion of buildings and roads, and provision of staff, vehicles and equipment for the State Corporations. Part B: 1. Provision of increases in staff, vehicles, equipment and operating costs of supporting services for the implementation of cashew planting and improvement by farmers. 2. Training for staff of the Project States and State Corpora- tions. 3. Implementation of a pilot scheme to determine appropriate cashew planting practices on about 500 hectares of coastal dune land in Orissa. 4. Improvement of about 200 km of feeder roads in Kerala. Part C: 1. Strengthening of research facilities by improving and expanding the Central Cashew Research Station and three regional sub-stations in Kerala, Andhra Pradesh and Orissa, and by estab- lishing one regional sub-station in Karnataka, for carrying out cashew research. 2. Preparation of a study for improvement of the organizational structure of the cashew industry. The Project is expected to be completed by December 31, 1984. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the /0.t day of 198 cL FOR SECRET