India - Bihar Agricultural Markets Project : Credit 0294 - Bihar Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 294 IN Bihar Agreement (Bihar Agricultural Markets Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF BIHAR DATED MARCH 29, 1972 CONFORMED COPY CREDIT NUMBER 294 IN Bihar Agreement (Bihar Agricultural Markets Project) BETWEEN INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE STATE OF BIHAR DATED MARCH 29, 1972 BIHAR AGREEMENT AGREEMENT, dated March 29, 1972, between THE STATE OF BIHAR, acting by its Governor, (hereinafter called Bihar) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS by a development credit agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Association (hereinafter referred to as the Development Credit Agreement), the Association has agreed to male available to the Borrower an amount in various currencies equivalent to fourteen million dollars ($14,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition inter alia that Bihar agrees to undertake such obligations toward the Association as hereinafter set forth; and WHEREAS by an agreement of even date herewith between the Association, of the one part, and the Agricultural Refinance Corporation and the State Bank of India, of the other part, the Agricultural Refinance Corporation and the State Bank of India, respectively, have agreed to undertake certain obligations in respect of the carrying out of the Project; and WHEREAS Bihar, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Particular Covenants Section 2.01. Bihar shall carry out the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with sound 4 financial, administrative, engineering and town planning practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 2.02. The operating policies and procedures for the carrying out of the Project shall be as set forth in Schedule 1 to the Project Agreement, as amended from time to time. Section 2.03. Bihar shall cause market locations to be determined only after detailed surveys and planning by TPO and SMB, made in accordance with the provisions of paragraph I of Schedule 1 to the Project Agreement. Section 2.04. Bihar shall acquire the ownership of all such lands, interests in land and properties and all rights, as may be necessary or proper for the construction of the market facilities under Part A of the Project and, unless the Association shall otherwise agree, shall make such lands available to the appropriate Market Committee in time to permit the completion of said Part of the Project according to the following time-table: 10 markets during the second year after the date of this Agreement; 10 markets during the third year; 15 markets during the fourth year; and 15 markets during the fifth year. Section 2.05. Bihar shall cause TPO and REO to provide a Market Committee with such technical assistance as shall be required for the Market Committee to prepare a complete plan for the development of its respective market. Section 2.06. Bihar shall cause REO, once the loan application shall have been approved by SBI, to prepare the necessary detailed plans, specifications and tender documents for the construction of the respective market, and to carry out the supervision of said construction, including approving all payments to contractors. Section 2.07. Except as the Association shall otherwise agree, Bihar shall ensure that the goods and services to be financed out of the proceeds of the Credit under Category I shall be procured in accordance with, and subject to, the provisions set forth in Schedule 3 to the Development Credit Agreement. Section 2.08. Except as the Association shall otherwise agree, Bihar shall set, maintain and enforce uniform market fees for all regulated markets within the territories of Bihar of not less than 1% of the value of agricultural produce marketed. 5 Section 2.09. Except as the Association shall otherwise agree and subject to the provisions of Section 29 of the Bihar Agricultural Produce Markets Act, 1960 (Bihar Act XVI of 1960), Bihar shall, until loans to a Market Committee have been repaid, ensure that the surplus fund of the Market Committee shall only be used for: (a) the following purposes, namely, (i) the Market Committee's contribution to SMB as prescribed under the laws of Bihar, (ii) the building of feeder roads, and (iii) the expansion of marketing facilities; and (b) notwithstanding (a) above, only after the Market Committee's current obligations to SBI under the Project have been met. Section 2.10. Except as the Association shall otherwise agree, Bihar shall cause SMB to employ the following qualified specialists: (a) By the Effective Date (i) a civil servant chief executive not below the rank of Collector who shall have primary responsibility for the carrying out of Part A of the Project, (ii) a Director and an Assistant Director of Agricultural Marketing and (iii) a Chief of Marketing Information; provided that the qualifications and experience required of the said Director of Agricultural Marketing shall be acceptable to the Association. (b) Within three months after the Effective Date (i) a Chief of Grading and Standards, (ii) an agricultural expert who will, inter alia, make projections of market arrivals, market committee revenues and market fees and (iii) three junior marketing specialists. Section 2.11. (a) Bihar undertakes to insure, or cause to be insured, or make, or cause to be made, adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. (b) Bihar shall cause the Market Committee beneficiaries of loans to take out and maintain with responsible insurers, or make other provisions satisfactory S 6 to the Association for, insurance against such risks and in such amounts as shall be consistent with sound practice. (c) Except as the Association may otherwise agree, Bihar shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 2.12. Except as the Association shall otherwise agree, Bihar shall, during each of the first three years after the Effective Date: (a) cause not less than three staff members of SMB to attend the appropriate training course at the institute operated by the Borrower's Directorate of Marketing and Inspection; (b) cause not less than fifteen market secretaries of the Market Committees to attend the appropriate training course for market secretaries provided by the Borrower; and (c) cause not less than 20 grading inspectors to attend the appropriate training course provided by the Borrower. Section 2.13. Bihar shall, within six months of the date of this Agreement, cause SMB to enter into a contract with an institution acceptable to the Association, under terms and conditions satisfactory to the Association, to assist Bihar in carrying out Part C of the Project. Any such contract shall include, inter alia, terms of reference substantially in accordance with the Terms of Reference set forth in the Schedule to this Agreement. Section 2.14. Bihar shall furnish to the Association, or cause TPO and REO to furnish to the Association, within three months of the Effective Date, a series of model market lay-outs and model plans, specifications, and tender documents which model documents shall after approval by the Association be the basis for the documents to be used for each individual market to be constructed under Part A of the Project; provided that if the model lay-outs, plans and specifications and tender documents approved by the Association for a particular market facility shall be modified or changed in any material respect, Bihar shall ensure that the requirements of paragraph 3 of Schedule 3 to the Development Credit Agreement are fully carried out by TPO and REO. Section 2.15. Bihar: (i) shall maintain records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in 0 7 the Project; (ii) shall enable the Association's representatives to inspect the Project, the goods financed out of such proceeds and any relevant records and documents: and (iii) shall furnish to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 2.16. Bihar shall cause Market Committee beneficiaries of loans (i) to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition, and (ii) to furnish to the Association and SBI such information concerning such accounts and financial statements as the Association and SBI, respectively, shall from time to time reasonably request. Section 2.17. Bihar and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, Bihar and the Association shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, and other matters relating to the purpose of the Credit. Section 2.18. Bihar and the Association shall promptly inform each othei of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the performance by either of them of its obligations under this Agreement, the perfonnance by any party to the Project Agreement, the Subsidiary Loan Agreement, or the Refinance Agreement of their respective obligations thereunder. Section 2.19. Bihar shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable (i) ARC to perlorm all of its obligations under the Subsidiary Loan Agreement, and (ii) ARC and SBI to perforn all of their respective obligations under the Project Agreement and the Refinance Agreement, and shall not take or permit to be taken any action which might interfere with the performance of any such obligations of ARC or SBI. Section 2.20. Except as the Association shall otherwise agree, Bihar shall cause the Market Committees to lease the storage godowns and traders' shops as set forth in Schedule I to the Project Agreement, provided, however, that as far as practicable the leases for the proposed godowns and traders' shops shall be executed before the markets have been constructed. 8 ARTICLE III Effective Date; Termination; Cancellation and Suspension Section 3.01. This Agreement shall come into force and effect on the Effective Date. If the Development Credit Agreement shall terminate pursuant to Section 10.04 of the General Conditions, the Association shall promptly notify Bihar of this event and, upon the giving of such notice, this Agreement and all obligations of the parties hereunder shall forthwith terminate. Section 3.02. This Agreement shall terminate and all obligations of Bihar and the Association hereunder shall cease and terminate on the date on which the Project Agreement terminates in accordance with its terms. Section 3.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any partial cancellation or suspension tinder the Development Credit Agreement. ARTICLE IV Miscellaneous Provisions Section 4.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For Bihar: Agricultural Production Commissioner, Sachaivalaya Patna Cable address: Agricultural Production Commissioner, Patna 9 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. Section 4.02. Any action required or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of Bihar, may be taken or executed by the Secretary to the Government of Bihar or such other person or persons as Bihar shall designate in writing. Section 4.03. Bihar shall furnish to the Association sufficient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of Bihar, take any action or execute any documents required or permitted to be taken or executed by Bihar pursuant to any of the provisions of this Agreement. Section 4.04. This Agreement may be executed in several counterparts. each of which shall be an original, and all collectively but one instrument. 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 delivered in the District of Columbia, United States of America, as of the day and year first above written. THE STATE OF BIHAR By /s / L. K. Jha Authorized Representatire INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ J. Burke Knapp Vice President 10 SCHEDULE Terms of Reference for an Evaluation of the Bihar Agricultural Markets Purpose 1. To examine the changing marketing pattern and to estimate the benefits resulting from setting up of the Bihar agricultural markets. Or,ganization 2. SMB will contract with an appropriate research institution acceptable to the Association to undertake the evaluation. The contract will specify, inter alia. (a) the senior research officer who will be in charge of the evaluation and the personnel who will collect the data and perform the analysis, (b) the time period for data collection, analysis and reporting; and (c) the compensation to be paid to the institution by SMB and the time of payment. Specific Objectives (Guidelines) 3. The behavior of the following factors will be specifically evaluated before and after the setting up of the markets: (a) net prices (after market charges) received by farmers; (b) wholesale market prices; (c) margins between (b) and (a); (d) costs of marketing; (e) losses in transporting the grain from farms to market yards; (f) handling losses in the market yards -- including those due to uncovered platforms; (g) storage losses; * 11 (h) storage costs; (i) quantities of grain marketed in the market yards; (j) market arrivals: seasonal pattern of marketings; (k) market intelligence available to cultivators on prices, supplies, production, etc.; (1) market intelligence available to market functionaries on prices, supplies, etc.; (m) quantities and pattern of grain dispatches to major terminal markets; (n) difference between prices prevailing in the newly constructed regulated markets and those in the major terminal markets; (o) number of market functionaries (i.e. traders, commission agents, brokers and employees for weighing, cleaning, bagging, loading, unloading, grading, etc.); (p) quantities of grain cleaned before selling in the yard, as proportion of total market arrivals; and (q) differences between the prices received for cleaned and uncleaned grain. Research Methodology (Guidelines) 4. Five markets to be constructed in the first year of the Credit disbursement and five additional markets to be constructed in the second year of the Credit disbursement will be selected for evaluation. The selection of the markets will be such as to allow as much variation in the volume and area of their operations as possible. Data collection will commence not less than six months prior to start oi construction, and will continue for two years subsequent to the completion of the markets. 5. One investigator will be assigned per market studied. If the investigator cannot be located in the market center, he should be able to make frequent trips to the market yard, e.g. two trips per week in the offseason and continuous stay in the market place for two or three months after the major harvest. 6. Data gathering will be a combination of statistical information and careful direct observation. 12 7. In gathering information on the terms listed under specific objectives, the following considerations will receive prime attention: (a) every effort will be made to collect prices of comparable varieties and grades of a particular crop; and (b) if there is no system of open auction and if no machinery is in existence for maintenance of price records, maximum, minimum and the most common prices prevailing in the market will be collected. For the purpose of this study daily, and if that is not feasible at least weekly, wholesale prices will be maintained. 8. The estimates of market arrivals will be as complete as possible from the commencement of the study. 9. If it is not possible to collect data from all the traders on their purchase and sale operations, data from at least five major wholesalers and/or commission agents will be collected. 10. Direct observation will involve maintenance of a diary by each investigator in which detailed information will be maintained on the following factors: (a) each year's production of principal crops in the tahsil and/or district in which the market is located; distribution of farm sizes in the area; if possible, information on whether marketings come from small or large farmers; (b) population of the district; (c) major terminal markets to which supplies are usually shipped; (d) description of rail and road connections joining the markets with feeder markets and with terminal markets; (e) description of availability of transport facilities generally and during specific seasons; difficulties encountered by traders in acquiring transport; (f) number and types of market functionaries; (g) description of existing storage facilities; 13 (h) data on storage losses by interviewing traders regarding length and type of storage; (i) interviews of cultivators regarding their views on market facilities, importance of cleaning, market charges, availability of credit, their general bargaining position, interest rates, etc.; and (j) description of availability of market intelligence to traders and to cultivators. Analysis of the Data 11. The data collected for each market will be made available to the Borrower and Bihar for analysis. The data will also be made available to the Association annually to enable it to conduct an evaluation of the Project. A report will be prepared by the senior research officer annually. The report will include analysis of the statistical information collected in the previous year and the direct observations made by the research investigators to evaluate the effects of the improvements on the marketing system.