OFFICIALDOCUMENTs

CREDIT NUMBER 5074-IN

Financing Agreement

(National Dairy Support Project)

between

INDIA

and

INTERNATIONAL DEVELOPMENT ASSOCIATION

Dated (1 ,2012

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CREDIT NUMBER 5074-IN

FINANCING AGREEMENT

AGREEMENT dated 13 , 2012, entered into between INDIA("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION("Association"). The Recipient and the Association hereby agree as follows:

ARTICLE I - GENERAL CONDITIONS; DEFINITIONS

1.01. The General Conditions (as defined in the Appendix to this Agreement)constitute an integral part of this Agreement.

1.02. Unless the context requires otherwise, the capitalized terms used in thisAgreement have the meanings ascribed to them in the General Conditions or inthe Appendix to this Agreement.

ARTICLE II- FINANCING

2.01. The Association agrees to extend to the Recipient, on the terms and conditionsset forth or referred to in this Agreement, a credit in an amount equivalent to twohundred eighteen million eight hundred thousand Special Drawing Rights(SDR 218,800,000) (variously, "Credit" and "Financing") to assist in financingthe project described in Schedule 1 to this Agreement ("Project").

2.02. The Recipient may withdraw the proceeds of the Financing in accordance withSection IV of Schedule 2 to this Agreement.

2.03. The Maximum Commitment Charge Rate payable by the Recipient on theUnwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) perannum.

2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balanceshall be equal to three-fourths of one percent (3/4 of 1%) per annum.

2.05. The Interest Charge payable by the Recipient on the Withdrawn Credit Balanceshall be equal to one and a quarter percent (1.25%) per annum.

2.06. The Payment Dates are June 1 and December I in each year.

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2.07. The principal amount of the Credit shall be repaid in accordance with therepayment schedule set forth in Schedule 3 to this Agreement.

2.08. The Payment Currency is Dollars.

ARTICLE III - PROJECT

3.01. The Recipient declares its commitment to the objectives of the Project. To thisend, the Recipient shall cause the Project to be implemented by NDDB (throughthe PMU (with the policy intervention and strategic support of the NationalSteering Committee) in accordance with the provisions of Article IV of theGeneral Conditions and the Project Agreement.

3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, andexcept as the Recipient and the Association shall otherwise agree, the Recipientshall ensure that the Project is carried out in accordance with the provisions ofSchedule 2 to this Agreement.

ARTICLE IV - REMEDIES OF THE ASSOCIATION

4.01. The Additional Event of Suspension consists of the following, namely thatNDDB's Legislation has been amended, suspended, abrogated, repealed orwaived so as to affect materially and adversely the ability of NDDB to performany of its obligations under the Project Agreement.

4.02. The Additional Event of Acceleration consists of the following, namely that theevent specified in Section 4.01 of this Agreement occurs and is continuing for aperiod of sixty (60) days after notice of the event has been given by theAssociation to the Recipient.

ARTICLE V -TERMINATION

5.01. The Effectiveness Deadline is the date ninety (90) days after the date of thisAgreement.

ARTICLE VI - REPRESENTATIVE; ADDRESSES

6.01. The Recipient's Representative is any of the following: the Secretary, AdditionalSecretary, Joint Secretary, Director, Deputy Secretary or Under Secretary of theDepartment of Economic Affairs in the Ministry of Finance.

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6.02. The Recipient's Address is:

Secretary to the Government of IndiaDepartment of Economic AffairsMinistry of FinanceNew Delhi, India

Facsimile:

91-11-23092039

6.03. The Association's Address is:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Facsimile:

1-202-477-6391

AGREED at N e J , India, as of the day and year first above written.

INDIA

ByAuthorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By

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SCHEDULE 1

Project Description

The objectives of the Project are to increase the productivity of milch animalsand improve market access of milk producers in the Project Area.

The Project consists of the following parts, subject to such modifications thereofas the Recipient, NDDB and the Association may agree upon from time to time toachieve such objectives.

Part A: Productivity Enhancement

Provision of support to:

1. increase bovine productivity through improved animal breeding,including, inter alia: (a) production of high genetic merit bulls;(b) strengthening of existing, and establishment of, new semenproduction stations; and (c) delivery of artificial insemination services.

2. improve bovine nutrition, including, inter alia: (a) implementation of aration balancing program to be provided to dairy farmers; and(b) interventions for fodder development.

3. training and capacity building of selected milk producers andfunctionaries (animal breeding and nutrition).

Part B: Milk Collection and Bulking

Provision of support to improve access to markets by developing village levelmilk collection and bulking facilities, including inter alia:

1. community mobilization and institution building through: (a) expansionof selected existing dairy cooperative societies, and (b) promotion of newmilk producer institutions which will be organized and registered asproducer companies.

2. training and capacity building of selected milk producers andfunctionaries (on milk collection and bulking); and

3. development of village level infrastructure for milk collection andbulking.

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Part C: Project Management and Learning

Provision of support to the PMU to ensure smooth implementation andcoordination of Project activities, including, inter alia, for: regular and timelymonitoring of implementation progress and outputs/outcomes, establishment,operation and management of computerized information systems at the PMU andEIAs; and learning through feedback to management.

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SCHEDULE 2

Project Execution

Section I. Implementation Arrangements

A. Institutional Arrangements

1. To facilitate the carrying out of the Project, the Recipient shall make the proceedsof the Financing available to NDDB, in accordance with the Recipient'sarrangements for development assistance.

2. The Recipient shall protect the interests of the Association to accomplish thepurposes of the Financing.

B. Anti-Corruption

The Recipient shall ensure that the Project is carried out in accordance with the

provisions of the Anti-Corruption Guidelines and the GAAP.

Section II. Project Monitoring, Reporting and Evaluation

A. Project Reports

I. The Recipient shall monitor and evaluate the progress of the Project and shallcause NDDB to prepare Project Reports in accordance with the provisions ofSection 4.08 of the General Conditions and on the basis of the Key PerformanceIndicators. Each Project Report shall cover the period of six (6) months, andshall be furnished to the Association not later than sixty (60) days after the end ofthe period covered by such report.

B. Financial Management, Financial Reports and Audits

1. The Recipient shall maintain or cause NDDB to maintain a financialmanagement system, for the Project, in accordance with the provisions ofSection 4.09 of the General Conditions.

2. Without limitation on the provisions of Part A of this Section, the Recipient shallor shall cause NDDB to, prepare and furnish to the Association not later thansixty (60) days after the end of each six (6) month period Interim UnauditedFinancial Reports (IUFR) for the Project covering said period, in form andsubstance satisfactory to the Association.

3. The Recipient shall, or shall cause NDDB to, have its Financial Statementsaudited in accordance with the provisions of Section 4.09(b) of the General

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Conditions. Each audit of the Financial Statements shall cover the period of one(1) financial year of the Recipient, commencing with the fiscal year in which thefirst withdrawal under the Project was made. The audited Financial Statementsfor each such period shall be furnished to the Association not later than six (6)months after the end of such period.

Section III. Procurement

A. General

1 . Goods, Works and Non-consulting Services. All goods, works and non-consulting services required for the Project and to be financed out of the proceedsof the Financing shall be procured in accordance with the requirements set forthor referred to in Section I of the Procurement Guidelines, and with the provisionsof this Section.

2. Consultants' Services. All consultants' services required for the Project and tobe financed out of the proceeds of the Financing shall be procured in accordancewith the requirements set forth or referred to in Sections I and IV of theConsultant Guidelines, and with the provisions of this Section.

3. Definitions. The capitalized terms used below in this Section to describeparticular procurement methods or methods of review by the Association ofparticular contracts, refer to the corresponding method described in Sections IIand III of the Procurement Guidelines, or Sections II, III, IV and V of theConsultant Guidelines, as the case may be.

B. Particular Methods of Procurement of Goods, Works and Non-consultingServices

1 . International Competitive Bidding. Except as otherwise provided inparagraph 2 below, goods, works and non-consulting services shall be procuredunder contracts awarded on the basis of International Competitive Bidding.

2. Other Methods of Procurement of Goods, Works and Non-consultingServices. The following table specifies the methods of procurement, other thanInternational Competitive Bidding, which may be used for goods, works andnon-consulting services. The Procurement Plan shall specify the circumstancesunder which such methods may be used:

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Procurement Method(a) National Competitive Bidding (subject to the additional provisions agreed

upon from time to time between the Recipient and the Association and setforth in the Procurement Plan)

(b) Limited International Bidding(c) Shopping(d) Framework Agreements(e) Direct Contracting

C. Particular Methods of Procurement of Consultants' Services

1. Quality- and Cost-based Selection. Except as otherwise provided inparagraph 2 below, consultants' services shall be procured under contractsawarded on the basis of Quality- and Cost-based Selection.

2. Other Methods of Procurement of Consultants' Services. The following tablespecifies methods of procurement, other than Quality- and Cost-based Selection,which may be used for consultants' services. The Procurement Plan shall specifythe circumstances under which such methods may be used:

Procurement Method(a) Quality Based Selection(b) Selection under a Fixed Budget(c) Least Cost Selection(d) Selection Based on Consultant's Qualifications(e) Single Source Selection(f) Selection of Individual Consultants

D. Review by the Association of Procurement Decisions

The Procurement Plan shall set forth those contracts which shall be subject to theAssociation's Prior Review. All other contracts shall be subject to Post Reviewby the Association.

Section IV. Withdrawal of the Proceeds of the Financinig

A. General

1. The Recipient may withdraw the proceeds of the Financing in accordance withthe provisions of Article II of the General Conditions, this Section, and suchadditional instructions as the Association shall specify by notice to the Recipient(including the "World Bank Disbursement Guidelines for Projects" dated May2006, as revised from time to time by the Association and as made applicable tothis Agreement pursuant to such instructions), to finance Eligible Expenditures asset forth in the table in paragraph 2 below.

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2. The following table specifies the categories of Eligible Expenditures that may befinanced out of the proceeds of the Financing ("Category"), the allocations of theamounts of the Financing to each Category, and the percentage of expenditures tobe financed for Eligible Expenditures in each Category:

Percentage ofAmount of the Expenditures to be

Financing Allocated FinancedCategory (expressed in SDR) (inclusive of Taxes)

(1) Goods, works, non-consulting 218,800,000 90%services, consultants' services,Training, Operating costs andEIA Grants for the Project

TOTAL AMOUNT 218,800,000

For purposes of this Section IV:

(a) the term "Training" means non-consultant expenditures incurred in connectionwith the provision of training, including training institution fees, logistics,materials, and the cost of travel and per diem of trainers and trainees; and

(b) the term "Operating costs" means incremental costs incurred by the PMU for thepurposes of carrying out the Project, including , incremental staff for the PMU,office rent and utilities, office and equipment insurance, office maintenance andrepair, vehicle maintenance and repair, communication and other administrativecosts directly associated with, and necessary under, the Project.

B. Withdrawal Conditions; Withdrawal Period

1 . Notwithstanding the provisions of Part A of this Section, no withdrawal shall bemade for payments made prior to the date of this Agreement, except thatwithdrawals up to an aggregate amount not to exceed SDR 7,000,000 equivalentmay be made for payments made prior to this date but on or after April 1, 2011for Eligible Expenditures.

2. The Closing Date is December 31, 2017.

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SCHEDULE 3

Repayment Schedule

Principal Amount of the Creditrepayable

Date Payment Due (expressed as a percentage)*On each June 1 and December 1:

commencing June 1, 2017 to and including 1.65%December 1, 2026

commencing June 1, 2027 to and including 3.35%December 1, 2036

* The percentages represent the percentage of the principal amount of the Credit to berepaid, except as the Association may otherwise specify pursuant to Section 3.03(b) ofthe General Conditions.

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APPENDIX

Section I. Definitions

1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing andCombating Fraud and Corruption in Projects Financed by IBRD Loans and IDACredits and Grants", dated October 15, 2006 and revised in January 2011.

2. "Category" means a category set forth in the table in Section IV of Schedule 2 tothis Agreement.

3. "Consultant Guidelines" means the "Guidelines: Selection and Employment ofConsultants under IBRD Loans and IDA Credits & Grants by World BankBorrowers" dated January 2011.

4. "EIA" and "End Implementing Agency" mean agencies operating in the ProjectArea (as hereinafter defined) including among those, inter alia, state cooperativedairy federations, district cooperative milk unions, producer companies and otherinstitutions and entities at the central and state level, which have been selected ina fair and transparent manner based on eligibility criteria agreed with theAssociation and detailed in the PIP (as hereinafter defined), to receive an EIAGrant (as hereinafter defined) to finance, in whole or in part, the carrying out of aSub-project (as hereinafter defined) pursuant to an EIA Grant Agreement (ashereinafter defined).

5. "EIA Grant" means, a grant by NDDB (as hereinafter defined), made or proposedto be made through the PMU (as hereinafter defined), out of the proceeds of theFinancing allocated from time to time to Part A, B and C of the Project, to anEIA, under an EIA Grant Agreement (as hereinafter defined), to finance, inwhole or in part, a Sub-project (as hereinafter defined), all in accordance with theselection criteria and procedures set forth in the PIP (as hereinafter defined) andthe provisions set forth in Section B of the Schedule to the Project Agreement.

6. "EIA Grant Agreement" means the grant agreement referred to in Section B. I ofthe Schedule to the Project Agreement, to be entered into between NDDB(through the PMU) and an EIA under the Project, as such agreement may beamended from time to time between NDDB and EIA by agreement thereonbetween NDDB (as hereinafter defined) and the Association.

7. "ESMF" means the Environmental and Social Management Frameworkcontained in Chapter 11 of the PIP (as hereinafter defined) governing all socialand environmental aspects of Project implementation, including mitigation andadaptive measures to offset, reduce to acceptable levels or eliminate, any adverseenvironmental and/or social impacts under the Project, as said framework may be

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updated from time to time by agreement between NDDB (as hereinafter defined)and the Association.

8. "Financial Management Handbook" means the financial management handbook,acceptable to the Association, dated September 26, 2011, and set forth as VolumeII of the PIP (as hereinafter defined), which sets forth the financial managementand institutional arrangements and obligations under the Project, as such manualmay be amended from time to time by agreement between NDDB (as hereinafterdefined) and the Association.

9. "GAAP" means the governance and accountability action plan, contained inChapter 7 of the PIP (as hereinafter defined) satisfactory to the Association,which sets out the key actions to be undertaken by NDDB (through the PMU)and the EIAs to strengthen governance, transparency, and accountability underthe Project, as such plan may be amended from time to time by agreementbetween NDDB (as hereinafter defined) and the Association

10. "General Conditions" means the "International Development AssociationGeneral Conditions for Credits and Grants", dated July 31, 2010, with themodifications set forth in Section II of this Appendix.

I1. "Key Performance Indicators" means the indicators for monitoring andevaluating progress towards the attainment of Project objectives, as set forth inthe PIP (as hereinafter defined).

12. "National Steering Committee" means a committee to be maintained by theRecipient's Department of Animal Husbandry, Dairying and Fisheries, Ministryof Agriculture, throughout Project implementation, and entrusted with theresponsibility of, inter alia, providing policy intervention and strategic support tothe Project and coordinating Project implementation among relevant governmentdepartments and other stakeholders.

13. "NDDB" means the National Dairy Development Board, an entity of theRecipient incorporated under the Recipient's National Dairy Development BoardAct, 1987 (No. 37 of 1987), or any successor thereto.

14. "NDDB's Legislation" means collectively, for purposes of this Agreement, theRecipient's National Dairy Development Board Act, 1987 (No. 37 of 1987) andthe Memorandum of Association of NDDB Dairy Services under the CompaniesAct, 1956.

15. "PIP" means the Project Implementation Plan, including all annexes and volumesthereto, acceptable to the Association, dated September 26, 2011, whichdescribes the Project implementation procedures, rules, methods, measures and

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arrangements, as such plan may be amended from time to time by agreementbetween NDDB and the Association

16. "PMU" means the Project Management Unit described in Section I.A.3 of theSchedule to the Project Agreement, to be maintained, throughout projectimplementation, by NDDB for the purpose of providing Project management andimplementation support.

17. "Procurement Guidelines" means the "Guidelines: Procurement of Goods, Worksand Non-consulting Services under IBRD Loans and IDA Credits & Grants byWorld Bank Borrowers" dated January 2011.

18. "Procurement Manual" means the Procurement Manual set forth as Volume III ofthe PIP, which manual sets out the procurement management and institutionalarrangements and obligations under the Project, as such manual may be amendedfrom time to time by agreement between NDDB and the Association.

19. "Procurement Plan" means the procurement plan for the Project, datedSeptember 26, 2011 and referred to in paragraph 1.18 of the ProcurementGuidelines and paragraph 1.25 of the Consultant Guidelines, as the same shall beupdated from time to time in accordance with the provisions of said paragraphs.

20. "Project Area" means selected villages in the Recipient's States of: AndhraPradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh,Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengaland any other State which meets the policy and regulatory criteria set forth in thePIP and which may be added in the future upon agreement between the Recipientand the Association.

21. "Project Implementing Entity" means NDDB.

22. "Project Steering Committee" means the committee under the Project describedin Section I.A.5 of the Schedule to the Project Agreement.

23. "Sub-project" means a set of eligible activities developed under Part A, Part Band Part C (as applicable) of the Project, prepared by an EIA and approved by theProject Steering Committee.

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Section II. Modifications to the General Conditions

The modifications to the General Conditions are as follows:

1. Section 3.02 is modified to read as follows:

"Section 3.02. Service Charge and Interest Charge

(a) Service Charge. The Recipient shall pay the Association a service charge on theWithdrawn Credit Balance at the rate specified in the FinancingAgreement. The Service Charge shall accrue from the respective dates onwhich amounts of the Credit are withdrawn and shall be payable semi-annually in arrears on each Payment Date. Service Charges shall becomputed on the basis of a 360-day year of twelve 30-day months.

(b) Interest Charge. The Recipient shall pay the Association interest on theWithdrawn Credit Balance at the rate specified in the Financing Agreement.Interest shall accrue from the respective dates on which amounts of theCredit are withdrawn and shall be payable semi-annually in arrears on eachPayment Date. Interest shall be computed on the basis of a 360-day year oftwelve 30-day months."

2. Paragraph 28 of the Appendix ("Financing Payment") is modified by insertingthe words "the Interest Charge" between the words "the Service Charge" and"the Commitment Charge".

3. The Appendix is modified by inserting a new paragraph 32 with the followingdefinition of "Interest Charge", and renumbering the remaining paragraphsaccordingly:

"32. "Interest Charge" means the interest charge specified in the FinancingAgreement for the purpose of Section 3.02(b)."

4. Renumbered paragraph 37 (originally paragraph 36) of the Appendix ("PaymentDate") is modified by inserting the words "Interest Charges" between the words"Service Charges" and "Commitment Charges".

5. Renumbered paragraph 50 (originally paragraph 49) of the Appendix ("ServiceCharge") is modified by replacing the reference to Section 3.02 withSection 3.02(a).