India - Assam Rural Infrastructure And Agricultural Services Project : Credit 2733 - Credit Agreement - Conformed

CREDIT NUMBER 2733 IN Development Credit Agreement (Assam Rural Infrastructure and Agricultural Services Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 6, 1995 CREDIT NUMBER 2733 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 6, 1995, between INDIA, acting by its President (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) the Association has received a letter dated April 6, 1995, from the State of Assam (Assam) describing reforms that constitute the framework for improving agricultural production in Assam including policy, institutional and administrative reforms (hereinafter called the Policy Reform Program), and declaring Assam's commitment to carry out such Policy Reform Program. (B) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing of the Project; (C) the Project willbe carried out by Assam with the Borrower's assistance and, as part. of such assistance, the Borrower will make available to Assam the proceeds of the Credit as provided in this Agreement; and WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, to extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Association and Assam; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the modifications thereto set forth bLlow (the General Conditions) constitute an integral part of this Agreement: (a) The last sentence of Section 3.02 is deleted. -2- (b) The second sentence of Section 5.01 is modified to read: "Except as the Association and the Borrower shall otherwise agree, no withdrawals shall be made: (a) on account of expenditures in the territories of any country which is not a member of the Bank or for goods produced in, or services supplied from, such territories; or (b) for the purpose of any payment to persons or entities, or for any import of goods, if such payment of import, to the knowledge of the Association, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations." Section 1.02. 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) "Assam" means the State of Assam, a State of the Borrower, or any successor thereto; (b) "Project Agreement" means the agreement between the Association and Assam of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the Project Agreement; (c) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (d) "PWD" means Assam Public Works Department; and (e) "NGO" means non-governmental organization. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to eighty one million Special Drawing Rights (SDR 81,000,000). -3- Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement 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. (b) The Borrower may, for the purposes of the Project, open and maintain in dollars a special deposit account in the Reserve Bank of India on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. The Closing Date shall be December 31, 2003 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1 %) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one percent (3/4 of 1 %) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. -4- Section 2.06. Commitment charges and service charges shall be payable semiannually on May 1 and November 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 1 and November 1 commencing November 1, 2005 and ending May 1, 2030. Each installment to and including the installment payable on May 1, 2015 shall be one and one-fourth percent (1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half percent (2-1/2%) of such principal amount. (b) Whenever (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years, and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's econony, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. Section 2.08. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. -5- ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objective of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall cause Assam to perform in accordance with the provisions of the Project Agreement all the obligations of Assam 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 Assam to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to Assam in accordance with the Borrower's standard arrangements for developmental assistance to the States of India. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works ar1 services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 1 to the Project Agreement. Section 3.03. The Borrower and the Association hereby agree that the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project shall be carried out by Assam pursuant to Section 2.03 of the Project Agreement. ARTICLE IV Financial Covenants Section 4.01. (a) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: -6- (i) maintain or cause to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensure that all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures are retained until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made; and (iii) enable the Association's representatives to examine such records. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) (i) of this Section and those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than nine months after the end of each such year the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested, including a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request. -7- ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) Assam shall have failed to perform any of its obligations under the Project Agreement. (b) An event has occurred which shall make it improbable that the Policy Reform Program or a significant part thereof will be carried out. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that any event specified in Section 5.01 (a) and (b) of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following is specified as an additional matter, 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 namely, that the Project Agreement has been duly authorized or ratified by Assam, and is legally binding upon Assam in accordance with its terms. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Secretary, Additional Secretary, Joint Secretary, Director, Deputy Secretary, or Under Secretary of the Department of Economic Affairs in the -8- 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 7.02. 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 Department of Economic Affairs Ministry of Finance New Delhi, PIN 110001 India Cable address: Telex: ECOFAIRS 953-3166175 New Delhi For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) -9- 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 2olumbia, United States of America, as of the day and year first above written. INDIA Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By Acting Regional Vice President South Asia - 10 - SCHEDULE 1 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 SDR Equivalent) to be Financed (1) Civil works 90% (a) for Part C.2 (v) 5,100,000 of the Project (b) other 43,100,000 (2) Goods 16,800,000 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 80% of local expenditures for other items procured locally (3) Consultants' 6,400,000 100% services and training (including NGOs' services) - 11 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (4) Incremental 9,600,000 70% until March operation 31, 1996, 50% and maintenance until March 31, costs and 1998, and 20% incremental thereafter staff salaries TOTAL 81,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower; and (c) the term "incremental operation and maintenance costs" means operation and maintenance costs of additional vehicles and equipment incurred for the Project after October 31, 1994, and "incremental staff salaries" means salaries in respect of posts created for the Project after October 31, 1994. 3. . Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made: - 12 - (a) in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not to exceed SDR 3,900,000 may be made on account of payments made for expenditures before that date but after October 31, 1994; and (b) in respect of expenditures under Category 1 (a) unless and until the Association has received a policy, financial arrangements and implementation plan, acceptable to the Association, for the maintenance of rural roads under Part C.2 (v) of the Project. 4. The Association may require withdrawals from the Credit Account to be made on the basis of statements of expenditure for expenditures for: (a) goods under contracts not exceeding $100,000 equivalent, and works under contracts not exceeding $200,000 equivalent; (b) services under contracts not exceeding $100,000 equivalent for employment of consulting firms and $50,000 equivalent for employment of individual consultants respectively; (c) training and fellowships; (d) works procured under force account; and (e) incremental operation and maintenance costs and incremental staff salaries, all under such terms and conditions as the Association shall specify by notice to the Borrower. - 13 - SCHEDULE 2 Description of the Project The objective of the Project is to assist Assam in (i) improving equity and alleviate poverty by offering better opportunities to poorer farmers and women to contribute to growth and income generation; (ii) improving nutrition of the rural poor; (iii) accelerating agricultural growth through improved use of resources, relieving infrastructure and technical constraints, and providing an enabling environment to facilitate the growth of private sector investments; (iv) encouraging sustainability of resource use and quality of the environment; and (v) improving Assam's long-term capacity for a strategic agricultural planning. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objective. Part A: Poverty Alleviation 1. Fisheries Development (i) Fish Production: Development of about 800 farm ponds, 150 community tanks, and 50 large beels; (ii) Fish Support Services: (a) Establishment of 6 fish health units and a mini-mill for testing and development of feed; (b) strengthening extension services by providing training to fish subject matter specialists; and (c) carrying out demonstration of integrated fish farming with horticulture and animal husbandry; and (iii) Monitoring and Evaluation: Provision of consultants' services for (a) investigating problems of flood-plain fisheries, (b) carrying out of an ecological survey of wetlands, and (c) monitoring and evaluation of the impact of the project on rural incomes and on the environment. - 14 - 2. Horticulture (i) Strengthening about 23 progeny orchards; (ii) provision of training for subject matter specialists for extension services; and (iii) establishment of demonstration plots on selected farmers' fields through provision of improved horticulture planting materials. 3. Livestock Development (i) supporting an artificial inseiniation program by extending coverage of breeding livestock through establishment of three frozen semen production stations, six frozen semen banks, rehabilitation of existing liquid nitrogen plants, and an extension of coverage of artificial insemination to the poor districts; (ii) strengthening disease diagnostic and investigation laboratories and disease monitoring through provision of equipment and materials; (iii) refurbishing Livestock Husbandry Department buildings for training, and provision of equipment and materials; (iv) provision of training for self-employed livestock technicians; (v) provision of training in basic aspects of animal husbandry and management; and (vi) supporting forage seeds production by the private sector through contracts and forage production by NGOs and Field Management Committees. - 15 - Part B: Institutional Development 1. Technology Generation (i) Strengthening the state-level applied research in six regional agricultural research stations under the Assam Agricultural University, namely: Titabar, Shilongani, Karimganj, Lakhimpur, Gossaigaon and Diphu; (ii) strengthening the livestock research center at Mandira, the horticultural research center at Kahikuchi and establishment of a new fisheries research center at Jorhat; and (iii) establishment of a pilot project on soil and water conservation and management. 2. Education and Training (i) Supporting pre-service training for women by refurbishing the Gram Sevika Training Center at Jorhat; (ii) strengthening the State Agricultural University to provide in- service training to extension staff; (iii) provisions of training to farmers; and (iv) upgrading the training facility at Naitoli to function as a state level staff Training Institute. 3. Extension (i) Extending coverage of modified extension service (broad based) to all agricultural sub-divisions, including eight additional sub- divisions and provision of vehicles for the Agricultural Department and for extension staff on a hire purchase arrangement; -16- (ii) supporting Field Trial Stations, to include demonstration of production technology (farm power and harvesting) on farmers' fields, and post harvest technology (crop drying and storage); and (iii) strengthening provision of information to extension staff through provision of equipment, materials, vehicles and rehabilitation of associated buildings. 4. Seed Multiplication (i) Provision of facilities, including machinery and equipment, for production and processing of breeder seed; (ii) repair of farm buildings; and (iii) provision of facilities required for improvement of foundation and certified seed farms. 5. Land Administration Carrying out of cadastral surveys and updating land records and consolidating fragmented land holdings, on a pilot scale, in about 15 villages of Kamrup District. Part C: Infrastructure Development 1. Irrigation (i) Construction of about 15,000 shallow tubewells covering about 33,000 ha; (ii) rehabilitation of about 320 deep tubewells and provision of combination pumpsets, and rehabilitation of about 150 river pumping schemes covering about 16,000 ha; (iii) construction of five irrigation tanks as a pilot scheme to irrigate about 100 ha; - 17 - (iv) establishment of farmer groups and provision of training to farmers in the proper operation and maintenance of the irrigation schemes, with the assistance of NGOs as promoters and organizers of farmers groups; and (v) provisions of staff training. 2. Rural Roads (i) Rehabilitation of about 1400 km of rural roads, including replacement of about 285 unserviceable timber bridges; (ii) provision of spare parts to revive heavy road construction equipment and machinery under PWD; (iii) provision of consultants' services to prepare road and bridge designs, specifications, drawings, bidding documents and to supervise construction by private contractors; (iv) modernization of PWD's design wing, laboratory, mechanical and road maintenance wings through provision of necessary materials and equipment; (v) maintenance of rural roads; and (vi) provision of training to PWD's personnel in project and contract management, quality control, road maintenance, and labor-intensive construction. Part D: Project mplementation 1. Strengthening the Project Implementation Unit through provision of vehicles, office equipment, and incremental operation and staffing. - 18 - 2. Carrying out of studies on soil and water management and marketing of high value crops. The Project is expected to be completed by June 30, 2003. - 19 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1), (2), (3), and (4) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $4 million to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule, provided, however, that, unless the Association shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to $2 million until the aggregate amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered by the Association pursuant to Section 5.02 of the General Conditions shall be equal to or exceed the equivalent of SDR 19 million. 2. (a) Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. (b) Each payment (including a payment under a letter of credit) for an eligible expenditure in an amount equal to or less than the equivalent of $1,300,000 shall be made exclusively out of the Special Account. The Association may from time to time, by notice to the Borrower, revise the threshold amount specified in the preceding sentence. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the - 20 - aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Association shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or - 21 - (b) if the Borrower shall have failed to furnish to the Association, within the period of time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required to be furnished to the Association pursuant to said Section in respect of the audit of the records and accounts for the Special Account; (c) if, at any time, the Association shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Credit Account purstant to the provisions of Section 6.02 of the General Conditions. (d) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, minus the total amount of all outstanding special commitments entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount. - 22 - (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in t& archives of the International -Development A-, iation. FOR SECRETARY