India - West Bengal Agricultural Development Project : Credit 0541 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 541 IN Development Credit Agreement (West Bengal Agricultural Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1975 CONFORMED COPY CREDIT NUMBER 541 IN Development Credit Agreement (West Bengal Agricultural Development Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED APRIL 28, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated April 28, 1975, 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 State of West Bengal, acting by its Governor (hereinafter called West Bengal) and the Association, West Bengal 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 (hereinafter called ARC), ARC has agreed to undertake certain obligations in respect of the carrying out of the Project; and (D) The Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon terms and condit-ons 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 modification thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions), namely that paragraph 5 of Section 2.01 is amended to read as follows: "5. The term Borrower means India, acting by its President". 4 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) "West Bengal" means The State of West Bengal, 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 West Bengal State Cooperative Land Development Bank, Limited, a cooperative society established and organized under the laws of West Bengal; (d) "West Bengal Agreement" means the agreement of even date herewith between West Bengal and the Association, as the same may be amended from time to time, and such term includes all schedules to the West Bengal Agreement; (e) "Project Agreement" means the agreement of even date herewith between the Association and ARC, as the same may be amended from time to time, and such ten-n includes all schedules to the Project Agreement; (f) "Primary Bank" means any Primary Land Development Bank which is a member of LDB; (g) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursuant to Section 3.02(a) hereof, and all schedules thereto, if any, as the same may be amended from time to time; (h) "Sub-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 farmers, Irrigation Group, a cooperative society, any owner of -an agro-service center, MIC or a Market Committee carrying out activities relevant to the Project in the Project Area which is eligible to receive a Sub-Loan; (j) "Participating Bank" means LDB, any branch of LDB or a commercial bank which has entered into an agreement with ARC in accordance with Section 2.03(b) of the Project Agreement; 5 (k) "MIC" means West Bengal State Minor Irrigation Corporation Limited, a company registered under the Companies Act, 1956, as amended; (1) "Banking Plan" means a plan to ensure adequate and suitable facilities to support banking operations required under the Project; (in) "Act" means the West Bengal Agricultural Produce Marketing (Regulation) Act, 1972; (n) "Marketing Board" means the West Bengal State Marketing Board, to be established by West Bengal pursuant to the provisions of the Act; (o) "Market Committee" means a market committee established pursuant to the provisions of the Act; (p) "Market" means a market established or declared as such under the provisions of the Act: (q) "Water Board" means the West Bengal Stat- Water Board established pursuant to West Bengal Resolution No. 7- Irrigation, dated January 2, 1974; (r) "Small Farmer" shall have the meaning assigned to it in Schedule 3 to the Project Agreement as such Schedule may be amended from time to time by agreement between the Borrower, ARC and the Association; (s) "Irrigation Group" means an organization of farmers which undertakes to develop, own and operate a deep tubewell 7.nder the criteria set forth in Schedule 2 to the Project Agreement and such term shall include the West Bengal Comprehensive Area Development Corporation and any Anchal Panchayat of West Bengal- (t) "Project Area" means the districts of Hooghly, Burdwan, Nadia, Murshidabad, Malda and West Dinajpur in West Bengal; and (u) "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 thirty-four million dollars ($34,000,000). 6 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, 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, the goods, works and services (other than consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions set forth or referred to in Schedule I to the West Bengal Agreement. (b) With respect to any contract for the goods described in paragraph (a) above, the Borrower shall make or cause to be made, allocations of any locally produced materials which are subject to allocation, promptly and in such quantities as shall be required for such contract. Section 2.04. The Closing Date shall be March 3 1, 1980 or such later date as the Association shall establish. The Association shall promptly notify the Borrower, West Bengal and ARC 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 I7) 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 May I and November I in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May I and November 1 commencing May 1, 1985 and ending November 1, 2024, each installment to and including the installment payable on November 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. Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause 7 (i) West Bengal to perform in accordance with the provisions of the West Bengal Agreement, and (ii) ARC to perform in accordance with the provisions of the Project Agreement, all the obligations therein set forth; shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable West Bengal and ARC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 3.02. (a) The Borrower shall enter into a subsidiary loan agreement with ARC on terms and conditions (including inter alici 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 funds equivalent to the proceeds of the Credit allocated under Category (1) of the table set forth in Schedule I to this Agreement. (b) The Borrower shall exercise its rights under the Subsidiary Loan Agreement in suTh 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, nor amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. (c) In order to assist West Bengal iii carrying out Part B of the Project, the Borrower shall make available to West Bengal funds equivalent to the proceeds of the Credit allocated under Category (2) of the table set forth in Schedule 1 to this Agreement. 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) West Bengal shall have failed to perform any of its obligations under the West Bengal Agreement or ARC shall have failed to perform any of its obligations under the Projuct Agreement or the Subsidiary Loan Agreement; (b) ARC, LDB or MIC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARC, LDB or MIC or by others whereby any of the property of ARC, LDB or MIC shall or may be distributed among its creditors; 8 (c) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ARC, LDB or MIC or for the suspension of the operations of ARC, LDB or MIC; and (d) An extraordinary situation shall have arisen which shall make it improbable that (i) West Bengal will be able to perform its obligations under the West Bengal Agreement or (ii) ARC will be able to perform its obligations under the Project Agreement or under the Subsidiary Loan Agreement. 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 paragraph (a) 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 West Bengal or ARC, as the case may be; and (b) any event specified in paragraphs (b) and (c) 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: (a) The West Bengal Agreement has been duly executed and delivered by West Bengal and has been duly authorized or ratified by all necessary governmental action. (b) 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. (c) 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. 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: 9 (a) that the West Bengal Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, West Bengal, and is legally binding upon West Bengal in accordance with its terms; (b) that the Project 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; and (c) 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 is legally binding upon the Borrower and ARC in accordance with its terms. Section 5.03. The date July 31, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Officer on Special Duty, 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 10 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 narnes 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 / M. L. Weiner Regional Vice President South Asia I I 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) Loans for: 55% of loans dis- bu rsed (a) Shallow 1 1,400,000 tubewells (b) Deep tube- wells (i) for MIC 1,000,000 (ii) for Irri- 1,000,000 gation Groups (c) Agro-service 1,000,000 centers (d) Markets 600,000 (2) (a) Riverlift 6,800,000 557 of local ex- and deep tube- penditures well irriga- tion schemes (b) Equipment for 1,000,000 100 of foreign the Water Board expenditures or and Engineering 55% of local ex- Directorate penditures 0 12 Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (c) Improvement of 2,200,000 55% of local agricultural ex- expenditures tension services (d) Technical as- 700,000 100% sistance and training (3) Unallocated 8,300,000 TOTAL 34,000,000 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. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made: 13 (a) in respect of expenditures prior to the date of this Agreement; (b) in respect of expenditures under Category (2)(a) until the technical specifications for riverlift installations have been mutually agreed upon between the Association and West Bengal; (c) in respect of expenditures under Category (1)(b)(i) until arrangements satisfactory to the Association for staffing and financing in respect of MIC have been made; or (d) in respect of expenditures under Category (1)(d) until the Marketing Board has been established in a form satisfactory to the Association. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table ii paragraph I 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 expenditures; 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. 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. 14 SCHEDULE 2 Description of the Project The Project is the first phase of a program to assist West Bengal with agricultural development in the Project Area and consists of: Part A: A four year program for loans through the Participating Banks for: (i) construction and equipping of about 18,000 shallow tubewells including, inter alia, land development and field channels; (ii) construction and equipping of about 200 deep tubewells for Irrigation Groups and about 100 deep tubewells for MIC including, inter alia, land development and field channels; (iii) construction of facilities (including, inter alia, roads, fencing, go-downs, auction platforms and shops) and acquisition of equipment for three Markets at Samsi, Karimpur and Katwa; and (iv) acquisition and utilization of machinery and equipment for the establishment of about 200 agro-service centers. Part B: A four year program for: (i) completion by West Bengal of about 600 partly constructed riverlift and deep tubewell schemes including, inter alia, land development and field channels; (ii) technical assistance, scholarships for staff and acquisition of equipment for the Water Board and the Engineering Directorate of the Department of Agriculture of West Bengal; training of secretaries of three Market Committees located at Samsi, Karimpur and Katwa; completion of (a) an economic evaluation of existing agricultural Markets and the impact of the Markets on agricultural development in West Bengal, with emphasis on the benefits to farmers, based on the study of the three Markets financed under the Project and selected similar Markets, and (b) feasibility 15 studies for the establishment of further Markets in West Bengal; and preparation of a second phase project; and (iii) employment of additional staff, acquisition of equipment and materials, and staff training, for improvement of extension services of the Department of Agriculture, West Bengal. The Project is expected to be completed by the end of September, 1979. 16 SCHEDULE 3 Principal Terms of Subsidiary Loan Agreement The following sets forth the principal terms and conditions under which funds equivalent to part of the proceeds of the Credit shall be lent to ARC by the Borrower: (a) In respect of ARC refinancing not exceeding 9 years: (i) interest rate of not less than 6-3/4% per annum less 1/4% for prompt payment; (ii) repayment at the end of 9 years. (b) In respect of ARC refinancing in excess of 9 but not exceeding 15 years: (i) interest rate of not less than 7-1/4% per annum less 1/4% for prompt payment; (ii) repayment at the end of 15 years. (c) The Borrower shall bear the foreign exchange risk.