India - Integrated Watershed Development (Hills) Project : Credit 2100 - Project Agreement - Conformed

CREDIT NUMBER 2100 IN LOAN NUMBER 3175 IN Project Agreement (Integrated Watershed Development (Hills) Project) among INTERNATIONAL DEVELOPMENT ASSOCIATION and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF HARYANA STATE OF HIMACHAL PRADESH STATE OF JAMU AND KASHMIR STATE OF PUNJAB Dated ,cYxLc 1991 CREDIT NUMBER 2100 IN LOAN NUMBER 3175 IN PROJECT AGREEMENT AGREEMENT, dated Cs_ALLCLAH L , 1991, among INTERNATIONAL DEVELO NT ASS0GIATION (the Association), INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and STATE OF HARYANA (Haryana), STATE OF HIMACHAL PRADESH (Himachal Pradesh), STATE OF JAMMU AND KASHMIR (Jammu & Kashmir), and STATE OF PUNJAB (Punjab) (collectively "the Project States" and individually "the Project State"). WHEREAS (A) by the Development Credit Agreement of even date herewith between India, acting by its President, (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to fifty-six million eight hundred thousand Special Drawing Rights (SDR 56,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that the Project States agree to undertake such obligations toward the Association as are set forth in this Agreement; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to thirteen million dollars ($13,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Project States agree to undertake such obligations toward the Bank as are set forth in this Agreement; WHEREAS the Project States, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, and the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the -2- Loan Agreement, the Preamble to this Agreement and in the General Conditions (as so defined in the Development Credit Agreement and the Loan Agreement, respectively) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) The Project States declare their commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall carry out Parts A.1, A.3, B.1, B.2, C.2 and D.1 through D.4 of the Project, and Punjab shall also carry out Part A.2 of the Project, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Association, the Bank and the Project States shall otherwise agree, the Project States shall carry out Parts A.1, A.3, B.1, B.2, C.2 and D.1 through D.4 of the Project and Punjab shall also carry out Part A.2 of the Project in accordance with the Implementation Program set forth in the Schedule to this Agreement. Section 2.02. Except as the Association and the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit and the Loan shall be governed by the provisions of Schedule 4 to the Development Credit Agreement. Section 2.03. The Project States shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions applicable to the Development Credit Agreement and in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions applicable to the Loan Agreement (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement. Section 2.04. (a) The Project States shall, at the request of the Association and the Bank, exchange views with the Association - 3 - and the Bank with regard to the progress of their respective Parts of the Project, the performance of their respective obligations under this Agreement, and other matters relating to the purposes of the Credit and the Loan. (b) The Project States shall promptly inform the Association and the Bank of any condition which interferes or threatens to interfere with the progress of their respective Parts of the Project, the accomplishment of the purposes of the Credit and the Loan, or the performance by the Project States of their respective obligations under this Agreement. ARTICLE III Financial Covenants Section 3.01. (a) The Project States shall maintain records and accounts adequate to reflect in accordance with sound accounting practices their operations, resources and expenditures in respect of Parts A, B.1, B.2, C.2 and D.1 through D.4 of the Project. (b) The Project States shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association and the Bank; (ii) furnish to the Association and the Bank as soon as available, but in any case not later than nine months after the end of each such year, (A) certified copies of its records and accounts referred to in paragraph (a) of this Section for such year as so audited, and (B) the report of such audit by said auditors, of such scope and in such detail as the Association and the Bank shall have reasonably requested; and (iii) furnish to the Association and the Bank such other information concerning said records and accounts and the audit thereof as 'the Association and the Bank shall from time to time reasonably request. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which both the Development Credit Agreement and the Loan Agreement become effective. Section 4.02. (a) This Agreement and all obligations of the Association, of the Bank and of the Project States thereunder shall terminate on the earlier of the following two dates: (i) the date on which both the Development Credit Agreement and the Loan Agreement shall have terminated in accordance with their respective terms; or (ii) the date 20 years after the date of this Agreement. (b) If the Development Credit Agreement or the Loan Agreement or both of said Agreements terminate in accordance with their respective terms before the date specified in paragraph (a) (ii) of this Section, the Association and the Bank shall promptly notify the Project States of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions applicable to the Development Credit Agreement or the Loan Agreement. ARTICLE V Miscellaneous Provisions Section 5.01. 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 - 5 - 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 the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) 82987 (FTCC) For Haryana: Directorate of Agriculture Government of Haryana Sector 17-C Chandigarh (U.T.), India Cable address: Telex: AGRIHARYANA 395-374 CHANDIGARH -6- For Himachal Pradesh: Department of Forest Farming and Conservation The Talland Shimla Himachal Pradesh, India Cable address: Telex: CHIEFSOIL 391-210 SHIMIA For Jamimu & Kashmir (November through April): Forest Department New Secretariat Jammu Tawi, India Cable address: Telex: FORSEC 375-229 JAMMU For Jammu & Kashmir (May through October): Forest Department New Secretariat Srinagar Kashmir, India Cable address: Telex: FORSEC 375-224 SRINAGAR KASHMIR For Punjab: Department of Agriculture and Forest Government of Punjab Chandigarh, India Telex: 395-028 -7- Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of each of the Project States may be taken or executed by the Director of Agriculture on behalf of Haryana, by the Chief Conservator of Forests (P & D) on behalf of Himachal Pradesh, by Commissioner and Secretary to Government on behalf of Jammu & Kashmir and by the Financial Commissioner Development on behalf of Punjab or such other person or persons as each Project State shall designate in writing, and each Project State shall furnish to the Association and the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. As long as the Bank has not given notice to the contrary to the Project States and so long as the Development Credit Agreement shall not have terminated prior to the termination of the Loan Agreement: (a) the obligations of the Project States to consult with, and to furnish information, documents, plans, reports, records and statements to, the Bank shall be satisfied to the extent performance in respect of such obligations is rendered to the Association; (b) the obligations of the Bank to consult with, and to furnish information to, the Project States shall be satisfied to the extent such obligations are fulfilled by the Association; and (c) all actions taken (including the giving of approvals or granting of waivers) by the Association pursuant to the Development Credit Agreement shall be deemed to be taken pursuant to both the Development Credit Agreement and the Loan Agreement, and in the name and on behalf of both the Association and the Bank. Section 5.04. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. -8- IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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. INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By CLC)S Ma A A-13 Regional Vice Pres dent Asia STATE OF HARYANA STATE OF HIMACHAL PRADESH STATE OF JAMMU AND KASHMIR STATE OF PUNJAB Authorized Representative -9- SCHEDULE Implementation Program 1. In carrying out Part D.1 of the Project, the Project States shall staff their respective WPIOs with qualified staff in adequate numbers, including a Project Director with such powers and functions, as may be necessary for the effective management and operation of the respective WPIO. 2. Each Project State shall establish a Steering Committee to review and approve sub-watershed plans, annual work programs under the Project and relevant draft budgets. 3. Each Project State shall, for the purposes of reviewing feasibility studies regarding the design and construction of water harvesting tanks under Part A.3 of the Project, constitute a Dam Review Panel. The Dam Review Panel shall have terms of reference satisfactory to the Association and the Bank. 4. Each Project State shall, for the purpose of disseminating the rainfed vegetative technology on arable lands, deploy in the Project Area village extension workers so as to achieve the ratio of at least one village extension worker per 400 farm families during the sub-watershed treatments. 5. Each Project State shall cause its WPIO to consult with village organizations prior to the treatment of sub-watersheds and to agree with them on the choice of treatments and cost and benefit sharing arrangements. 6. Each Project State shall achieve arrangements for cost sharing, either in cash or in kinds, in the Project Area, including: (a) in respect of privately owned arable and non-arable lands to be treated in the Project Area, the individual beneficiary landholder shall contribute about fifteen percent of the cost of labor and planting materials relating to such treatment in respect of the beneficiary's land; (b) in respect of arable and non-arable community lands, vested in the Panchayats, to be treated in the Project Area, the Panchayats shall contribute about ten percent of the cost of labor relating to such treatment; - 10 - (c) in respect of non-arable State forest land, the Project States shall enter into written agreements with beneficiaries or their representatives for the purpose of sharing: (i) the responsibility for protecting the forest resources to be developed under the Project, and (ii) the benefits resulting from such development. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE f hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development and the International Development Association. FOR SECRETARY