Announcement of Fourteen Million Dollars Credit for Agricultural Markets in Bihar State, India on March 2, 1972

,, .INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE; EXECUTIVE 3-6360 IDA Press Release No. 72/16 Subject: $14.0 million credit for March 2, 19 72 agricultural markets in Bihar State, India Improvenents in the agricultural marketing system in Bihar State, an important ele.ment in India's str·ategy to sustain the momentum of growth in the agricultural sector, wi.11 be assisted by a credit of $14. 0 million from the International Development Associati.on, an affiliate of the World Banlc. The credit,. first from the World Bank Group in direct support of develop- ment of market centers for farm products, will finance a five-year program • of investment in market facilities in 50 towns in Bihar, and will also provide ftmds for training of personnel in marketing and project evaluation. Developments in the 50 market centers will include access roads, fenced yards, auction platforms, office buildings, wholesalers shops and storage. In addition, amenities for farmers, like tea shops, water for human and animal consumption, parking areas for bullocks and carts will be provided. Ultimately, these centers are expected to have buildings for other facilities like banks, post offices, extension services and shops selling various agricultural inputs -- fertilizers, pesticides and high-yielding seeds and implements. The project will help to bring about fair trading practices, competitive prices, efficient handling of produce, and to reduce wastage. About 1.5 million farmers in the State, mostly smallholders, are expected to increase their • incomes through the project. Better farm prices, resulting from the project, should stimulate higher agricultural production. /more  .. IDA P.R. No. 72/16 -- India agriculture •l • - 2 - One of the important elements of the Govemment of India's strategy of development aimed at increasing agricultural production, is the improvement of the agricultural marketing network in the colUltry. The Govemment has encouraged State Governments to pass legislation to facilitate a marketing I system that will ensure fair competition, efficient handling and cleaning of produce and a reduction in wastage. Over 90% of Bihar's population of 58 ~~llion live in the rural areas and most of the rural population depend on agriculture and related activities for a living. In recent years, Bihar has taken a number of steps to increase agricultural production. These include programs for a substantial extension of surface and tubewell irrigation, increasing the use of fertilizers and • high-yielding seeds, expansion of agricultural credit and improvement of agricultural marketing. The State Government has now given priority to developing marketing facilities under its Agricultural Markets Acts. Each of the market centers to be developed under the project will be owned by a Market Committee (MC) consisting of both traders and farmers. A State Marketing Board (SMB) will be established by the Government with powers to supervise the MCs and their finances. SMB will be responsible for the planning and development of the markets and their operation. The Town and Country Planning Organization, an agency of the State Government, will conduct detailed surveys to determine the location of each market. The total cost of the project is estimated at $23.3 million, of which $5.9 million will be in foreign exchange. The IDA credit of $14 million will finance the foreign exchange costs and about 50% of the local costs. Land for market centers will be provided by the State Government. . /more The balance of the cost will be provided by the Agricultural Refinance Corporation (ARC), • " IDA P.R. No., 72/16 -- India -- agriculture • - 3 - an agency established in 1963 to provide medium and long-term finance to agricultural credit institutions, the State Bank of India and the MCs. The IDA credit will be extended to the Government of Iudia for a period of 50 years, including 10 years of grace. It will be interest free, but a service charge of 3/4 of 1% will be made to cover IDA's administrative· expenses. The proceeds of the credit will be relent to ARC which will repay the Government over 15 years at an interest rate of 6%. ARC will refinance State Bank lo~ at 6 1/2% repayable in 15 years. The State Bank will provide funds to MCs at appropriate terms. The project is scheduled for completion in 1977 • • - 0 - •  • • March '2, 1972 TECHNICAL DATA PROJECT: Agricultural Marketing in Bihar State. COUNTRY: India TOTAL COST: $23.3 million equivalent . . IDA FINANCING: Credit of $14.0 million, 50 years, 10 years~of grace, no interest, but a service charge of 3/4 of 1%. OTHER FINANCING: Balance of the cost being provided by tne Government of Bihar (in the form of land), the Agricultural Befinance Corporation (ARC), the State Bank of India and the participating Market Committees • RELENDING TERMS: Proceeds of IDA credit will be relent to ARC which will repay Govemment of India after 15 years at 6%. ARC will refinance State Bank of India loans to market centers at 6 1/2%, repayable in 15 years. State Bank will lend to Market Committees at appropriate • tenns. IMPLEMENTING ORGANIZATION: State Marketing Board of Bihar, Patna, Bihar, India. PROJECT DESCRIPTION: Development of 50 agricultural market centers in as many towns in Bihar, together with associated facilities and training of personnel in marketing and project evaluation. PROCUREMENT: The design and size of civil works for market centers will not lend itself to international competitive bidding. ESTIMATED COMPLETION DATE: 1977. - 0 - •