India - Rajasthan Canal Command Area Development Project : Credit 0502 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 502 IN Development Credit Agreement (Rajasthan Canal Command Area Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 31, 1974 CONFORMED COPY CREDIT NUMBER 502 IN Development Credit Agreement (Rajasthan Canal Command Area Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 31, 1974 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 31, 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 d scribed 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 che 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 ARC Agreement and to the Project Agreement of their respective obligations under the said agreements." 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) "ARC 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. (d) "Project Agreement" means the agreement of even date herewith between Rajasthan and the Association, as the same may be amended from time to time. (e) "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 ARC Agreement. (f) "LDB" means Rajasthan State Cooperative Land Development Bank, Limited, a cooperative society established and organized under the laws of Rajasthan. (g) "RLDC" means Rajasthan Land Development Corporation, a statutory corporation to be established by law of Rajasthan. (h) "Category" means a category of the allocation of proceeds of the Credit set forth in Schedule 1 to this Agreement. 5 (i) "CAA" means Command Area Authority, established in the Government of Rajasthan. (j) "Project Area" means the command area of Stage I of the Rajasthan Canal Project. (k) "Rs" means rupees in the currency of the Borrower. (1) "Circle" means an administrative subdivision in Rajasthan. 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 eighty-tlree million dollars ($83,000,000). 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, 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, 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 Section 2.07 of the Project 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 Project Agreement), the Borrower shall immediately grant pennission 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 1 to the Project Agreement), the Borrower shall: (i) promptly upon receipt of the 6 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 June 30, 1981 or such other date as shall 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 including 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. 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, engineering, 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 lending to ARC an amount equivalent to 75% of such amount as shall be necessary for ARC to 0 7 refinance not less than 80% of loans from Participating Banks and LDB to farmers in the Project Area for land development. 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 A through F and H of the Project, the Borrower shall make available to Rajasthan the proceeds of the Credit under Categories (1)(a) and (2). (d) The Borrower shall cause Rajasthan to make arrangements in its annual development plan for the provision of funds required for the implementation of the Project in accordance with a detailed schedule of construction which shall be acceptable to the Association. 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 under the Project Agreement, and (ii) ARC to perform its obligations under the ARC 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. ARTICLE IV Remedies of the Association Section 4.01. The Association may, upon the occurrence of certain events specified in Sections 6.02 or 7.01 of the General Conditions or in Sections 4.02 or 4.03 of this Agreement and the continuance thereof for the period, if any, specified for the purpose: (i) suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account or (ii) declare the principal of the Credit then outstanding to be due and payable immediately together with the charges thereon. Section 4.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: 8 (a) Rajasthan shall have failed to perform any of its obligations under the Project Agreement; ARC shall have failed to perform any of its obligations under the ARC Agreement or under the Subsidiary Loan Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that (i) Rajasthan will be able to perform its obligations under the Project Agreement, or (ii) ARC will be able to perform its obligations under the ARC Agreement or under the Subsidiary Loan Agreement. (c) ARC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC or by others whereby any of the property of ARC 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 for the suspension of the operations of ARC. Section 4.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) any event specified in paragraph (a) of Section 4.02 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 (b) any event specified in Paragraphs (c) and (d) of Section 4.02 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: (a) The ARC 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. 9 (c) The Project Agreement has been duly executed and delivered by Rajasthan and has been duly authorized or ratified by all necessary governmental action. (d) RLDC has been duly established under the laws of Rajasthan with capitalization, board membership and powers satisfactory to the Association. (e) CAA has been duly established by Rajasthan, with organization, board membership and powers satisfactory to the Association. 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 ARC Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC, and constitutes a valid and binding obligation of 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, respectively, and constitutes a valid and binding obligation of the Borrower and ARC in accordance with its terms; (c) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, Rajasthan and constitutes a valid and binding obligation of Rajasthan in accordance with its terms. Section 5.03. The date October 29, 1974 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of Section 4.02 of this Agreement and those of Section 4.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 30 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: 10 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 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 Autliorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Mervyn L. Weiner Regional Vice President South Asia 11 SCHEDULE I 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 (a) infrastructure 30,000,000 42% (b) on-farm 21,400,000 42% development * (2) Equipment and 6,300,000 vehicles (a) directly 100% of foreign imported expenditures (CIF) (b) locally 100% of local manufactured expenditures (ex-factory) (c) imported items 70% procured locally (3) Fertilizer I 8,700,000 100% of foreign expenditures (CIF) (4) Unallocated 6,600,000 TOTAL 83,000,000 12 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. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of expenditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 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) and (2) 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: (i) re-allocate the amount of such Category, no longer required therefore to Category (1) and (ii) increase the percentage applicable to such Category (1) correspondingly (up to a maximum of 100% net of taxes). 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 13 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. 14 SCHEDULE 2 Description of the Project The Project is part of a program for the improvement of irrigation and road facilities, on-farm development, village development, and the provision of agricultural supporting services to serve an area of about 200,000 ha in the command area of Rajasthan Canal. It consists of the following parts: A. Land Development (1) The leveling of about 32,000 ha of land; (2) The reclamation of about 17,000 ha of saline soils; (3) The construction and lining of about 5,800 km of watercourses. B. Canal Lining The construction of about 915 km of canal lining to increase canal capacity and reduce water losses. C. Afforestation Afforestation, including the plantation of shelter belts along about 5700 km of canals and roads, controlled pasture development on about 35,000 ha of sand dunes in and around the irrigated areas and firewood plantation. D. Roads The construction of about 430 km of major, market, feeder and village roads. E. Water Supply The construction and installation of sanitary water supply systems in about 100 villages. F. Vehicles, Equipment and Buildings I. The provision and utilization of vehicles and equipment for project administration, construction of works under force account and agricultural support services. 15 2. The construction of temporary buildings for offices and staff housing during construction. G. Fertilizer The procurement of 46,000 nutrient tons of fertilizer and its distribution to Project Area farmers over a period of three years after on-farm development works on their farms have been completed. H. Research, Extension, Operation and Maintenance The improvement of agricultural research and extension work in the Project Area and of operation and maintenance standards for Project irrigation and road systems. The Project is expected to be completed by June 30, 1980. 16 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement For ARC refinancing up to 9 years: (a) Annual interest rate to be not less than 6-1/4%, less 1/4% for prompt repayment; (b) Repayment to be made at the end of nine years. II. For ARC refinancing from 9 to 15 years: (a) Annual interest rate to be not less than 6-3/4%, less 1/4% for prompt repayment; (b) Repayment to be made at the end of 15 years. Ill. General The exchange risk to be on the account of the Borrower.