Page  1
CONFORMED COPY
CREDIT NUMBER 3413 IN
Development Credit Agreement
(Third Technician Education Project)
between
INDIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated October 18, 2000
CREDIT NUMBER 3413 IN
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated October 18, 2000, between INDIA (the Borrower) and 
INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Borrower, having satisfied itself as to the 
feasibility and priority of the Project described in Schedule 2 to this 
Agreement (the Project), has requested the Association to assist in the 
financing of the Project;
(B)
the Project will be carried out by the Borrower, in respect 
of the Union Territory (as herein defined), and the Project States (as 
herein defined) with the Borrower’s assistance and, as part of such 
assistance, the Borrower will make the proceeds of the credit provided 
for in Article II of this Agreement (the Credit) available to the Project 
States, as set forth 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 agreement of even date 
herewith between the Association and the Project States (the Project 
Agreement);
NOW THEREFORE the parties hereto hereby agree as follows:
Page  2
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development 
Credit Agreements” of the Association, dated January 1, 1985 (as amended 
through October 6, 1999), with the modifications set forth below (the 
General Conditions), constitute an integral part of this Agreement.
(a)
A new paragraph (12) is added to Section 2.01 to read as set 
forth below, and the existing paragraphs (12) through (14) of said 
Section are accordingly renumbered as paragraphs (13) through (15):
“12.
‘Participating Country’ means any country that the 
Association determines 
meets the requirements set forth 
in Section 11 of Resolution No. 194 of the Board of 
Governors of 
the Association, adopted on April 8, 1999; and ‘Participating Countries’ 
means, collectively, all such countries.” ; and
(b)
The second sentence of Section 5.01 is modified to read:
“Except as the Borrower and the Association shall otherwise 
agree, no withdrawals 
shall be made: (a) on account of 
expenditures in the territories of any country which is not 
a 
Participating Country 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 or 
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 and in the Preamble to this 
Agreement have the respective meanings therein set forth and the 
following additional terms have the following meanings:
(a)
“Eligible Categories” means categories 1 through 5 set forth 
in the table in Part A.1 of Schedule 1 to this Agreement;
(b)
“Eligible Expenditures” means the expenditures for goods and 
services referred to in Section 2.02 of this Agreement;
(c)
“Project Agreement” means the agreement between the 
Association and the Project States 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;
(d)
“Project Management Report” means each report prepared in 
accordance with Section 3.02 of the Project Agreement;
(e)
“Project States” means the following States of the Borrower: 
Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu 
and Kashmir, and include any successor or successors thereto; 
(f)
“Special Account” means the account referred to in Part B of 
Schedule 1 to this Agreement; and
(g)
“Union Territory” means the Union Territory of Andaman and 
Nicobar Islands and any successor or successors thereto.
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 
Page  3
Credit Agreement, an amount in various currencies equivalent to 
forty-eight million nine hundred thousand Special Drawing Rights (SDR 
48,900,000).
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 
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. The Closing Date shall be June 30, 2006 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 canceled; and (ii) at the rate set as of the June 
30 immediately preceding the accrual date and 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 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.
Section 2.06. Commitment charges and service charges shall be 
payable semiannually on February 1 and August 1 in each year.
Section 2.07. (a)  Subject to paragraphs (b), (c) and (d) below, 
the Borrower shall repay the principal amount of the Credit in semiannual 
installments payable on each February 1 and August 1 commencing February 
1, 2011 and ending August 1, 2035. Each installment to and including the 
installment payable on August 1, 2020 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 per capita gross national 
product (GNP), as determined by the Association, shall have exceeded for 
three consecutive years the level established annually by the Association 
for determining eligibility to access the Association’s resources; 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 economy, modify the repayment 
of installments under paragraph (a) above by: (A) 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; and (B) requiring 
the Borrower to commence repayment of the principal amount of the Credit 
as of the first semiannual payment date referred to in paragraph (a) 
above falling six months or more after the date on which the Association 
notifies the Borrower that the events set out in this paragraph (b) have 
Page  4
occurred, provided, however, that there shall be a grace period of a 
minimum of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise 
the modification referred to in paragraph (b) above 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 abovementioned 
repayment modification.
(d)
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.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the 
objectives of the Project as set forth in Schedule 2 to this Agreement, 
and, to this end, shall: (i) carry out the Project in respect of the 
Union Territory with due diligence and efficiency and in conformity with 
appropriate administrative, financial, and educational practices, and 
shall provide, promptly as needed, the funds, facilities, services and 
other resources required for the Project; and (ii) without any limitation 
or restriction upon any of its other obligations under this Agreement, 
cause the Project States to perform in accordance with the provisions of 
the Project Agreement all the respective obligations of the Project 
States therein set forth, shall take and cause to be taken all actions, 
including the provision of funds, facilities, services and other 
resources, necessary or appropriate to enable the Project States to 
perform such obligations, and shall not take or permit to be taken any 
action which would prevent or interfere with such performance.
(b)
Without limitation upon the provisions of paragraph (a) (i) 
of this Section and except as the Borrower and the Association shall 
otherwise agree, the Borrower shall in respect of the Union Territory 
carry out the Project mutatis mutandis in accordance with the 
Implementation Program set forth in Schedule 2 of the Project Agreement.
(c)
The Borrower shall make  part of the proceeds of the Credit 
available to the Project States for such parts of the Project as are to 
be carried out by each Project State in accordance with the Borrower’s 
standard arrangements for development assistance to the States of India.
Section 3.02. Except as the Association shall otherwise agree, 
procurement of the goods, works and 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 portions of the Project to 
be carried out by the Project States, shall be carried out by the 
respective Project States pursuant to Section 2.03 of the Project 
Agreement.
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ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be 
maintained records and accounts adequate to reflect in accordance with 
sound accounting practices the operations, resources and expenditures in 
respect of the Project of (i) the departments or agencies of the Borrower 
responsible for the Project, and (ii) the Project States responsible for 
carrying out their respective parts of the Project.
(b) 
The Borrower shall:
(i)
have the records and accounts referred to in 
paragraph (a) of this Section 
including 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 six 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 Project 
Management Reports or 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 necessary 
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.
(c)
For all expenditures with respect to which withdrawals from 
the Credit Account were made on the basis of Project Management Reports 
or statements of expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance 
with paragraph (a) of this 
Section, records and 
accounts reflecting such expenditures;
(ii)
retain, 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, all records (contracts, orders, invoices, bills, receipts 
and other documents) evidencing such expenditures;
(iii)
enable the Association’s representatives to examine 
such records; and
(iv)
ensure that such records and accounts are included in 
the annual audit 
referred to in paragraph (b) of 
this Section and that the report of such audit 
contains a separate opinion by said auditors as to whether the Project 
Management Reports or 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.
Section 4.02. (a) Without limitation upon the provisions of Section 
4.01 of this Agreement, the Borrower shall carry out a time-bound action 
plan acceptable to the Association for the strengthening of its financial 
management system for the Project in order to enable the Borrower, by 
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April 1, 2001 or such later date as the Association shall agree, to 
prepare quarterly Project management reports, acceptable to the 
Association, each of which:
(i) 
(A) sets forth actual sources and applications of 
funds for the Project, both 
cumulatively and for the 
period covered by said report, and projected sources 
and 
applications of funds for the Project for the six-month period following 
the period covered by said report, and (B) shows 
separately expenditures 
financed out of the 
proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the proceeds 
of the 
Credit during the six-month period 
following the period covered by said 
report;
(ii)
(A) describes physical progress in Project 
implementation, both cumulatively 
and for the period 
covered by said report, and (B) explains variances between 
the actual and previously forecast implementation targets; and
(iii)
sets forth the status of procurement under the 
Project and expenditures under 
contracts financed out of 
the proceeds of the Credit, as at the end of the 
period covered by said report.
(b)
Upon the completion of the action plan referred to in 
paragraph (a) of this Section, the Borrower shall prepare, in accordance 
with guidelines acceptable to the Association, and furnish to the 
Association not later than 45 days after the end of each calendar quarter 
a Project Management Report for such period.
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (l) of the General 
Conditions, the following additional events are specified:
(a)
Any of the Project States shall have failed to perform any 
of its obligations under the Project Agreement.
(b)
As a result of events which have occurred after the date of 
the Development Credit Agreement, an extraordinary situation shall have 
arisen which shall make it improbable that any of the Project States will 
be able to perform its obligations under the Project Agreement.
Section 5.02. Pursuant to Section 7.01(h) of the General 
Conditions, the following additional event is specified, namely that any 
event specified in paragraph (a) of Section 5.01 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 each of the Project States, and is legally binding upon them 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.
Page  7
ARTICLE VII
Representatives of the Borrower; Addresses
Section 7.01. Any Secretary, Additional Secretary, Joint Secretary, 
Director, Deputy Secretary or Under Secretary of the Department of 
Economic Affairs 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 7.02. The following addresses are specified for the 
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Secretary to the Government of India
Ministry of Finance
Department of Economic Affairs
New Delhi, India
Cable address:
Telex:
Facsimile:
ECOFAIRS
953-3166175
91113013404
New Delhi
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 
477-6391
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly 
authorized representatives, have caused this Agreement to be signed in 
their respective names in New Delhi, India, as of the day and year first 
above written.
INDIA
By /s/ Navin Kumar
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Edwin R. Lim
Country Director, India
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
A.
General
Page  8
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 
   15,800,000
90%
(2)
Goods (including equipment,
   12,700,000
100% of 
foreign
furniture and vehicles)
expenditures,
100% of local
expenditures
(ex-factory cost)
and 80% of local
expenditures for 
other
items procured
locally
(3)
Books and instructional
    2,500,000
100%
materials
(4)
Training, fellowships,
    6,500,000
100%
consultants’ services,
and workshops
(5)
Incremental operating 
    8,000,000
80% until
costs
November 30, 2002;
65% from
December 1, 2002
until
November 30, 2004;
and 25% thereafter
(6)
Unallocated
    3,400,000
TOTAL
   48,900,000
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  operating costs” means the costs of 
operation and maintenance of equipment and, vehicles, office rental and 
expenses, hiring of vehicles, salaries and allowances of additional 
staff, and travel and supervision costs incurred for the purposes of 
carrying out the Project.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals 
shall be made in respect of payments made for expenditures prior to the 
date of this Agreement, except that withdrawals, in an aggregate amount 
not exceeding the equivalent of SDR 800,000, may be made on account of 
payments made for expenditures before that date but after October 1, 
Page  9
1999.
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 and works under contracts not exceeding $300,000 equivalent; 
(b) services under contracts not exceeding $100,000 equivalent for 
employment of consulting firms and $50,000 for employment of individual 
consultants, respectively; (c) books and instructional material; (d) 
training, fellowships and workshops; and (e) incremental operating costs, 
all under such terms and conditions as the Association shall specify by 
notice to the Borrower.
B.
Special Account
1.
The Borrower shall open and maintain in dollars a special deposit 
account, in the Reserve Bank of India, on terms and conditions 
satisfactory to the Association.
2.
After the Association has received evidence satisfactory to it that 
the Special Account has been opened, withdrawals from the Credit Account 
of amounts to be deposited into the Special Account shall be made as 
follows:
(a)
until the Association shall have received (i) the first 
Project Management Report referred to in Section 4.02(b) of this 
Agreement and (ii) a request from the Borrower for withdrawal on the 
basis of Project Management Reports, withdrawals shall be made in 
accordance with the provisions of Annex A to this Schedule 1; and
(b)
upon receipt by the Association of a Project Management 
Report pursuant to Section 4.02(b) of this Agreement, accompanied by a 
request from the Borrower for withdrawal on the basis of Project 
Management Reports, all further withdrawals shall be made in accordance 
with the provisions of Annex B to this 
Schedule 1.
3.
Payments out of the Special Account shall be made exclusively for 
Eligible Expenditures.  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.
4.
Notwithstanding the provisions of Part B.2 of this Schedule, the 
Association shall not be required to make further deposits into the 
Special Account:
(a)
if the Association determines at any time that any Project 
Management Report does not adequately provide the information required 
pursuant to Section 4.02 of this Agreement;
(b)
if the Association determines at any time that all further 
withdrawals should be made by the Borrower directly from the Credit 
Account; or
(c)
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 (A) the 
records and accounts for the Special Account or (B) the records and 
accounts reflecting expenditures with respect to which withdrawals were 
made on the basis of Project Management Reports or statements of 
expenditure.
5.
The Association shall not be required to make further deposits into 
the Special Account in accordance with the provisions of Part B.2 of this 
Schedule if, at any time, the Association shall have notified the 
Page  10
Borrower of its intention to suspend in whole or in part the right of the 
Borrower to make withdrawals from the Credit Account pursuant to Section 
6.02 of the General Conditions. Upon such notification, the Association 
shall determine, in its sole discretion, whether further deposits into 
the Special Account may be made and what procedures should be followed 
for making such deposits, and shall notify the Borrower of its 
determination.
6.
(a)
If the Association determines at any time that any payment 
out of the Special Account was made for an expenditure which is not an 
Eligible Expenditure, or was not justified by the evidence furnished to 
the Association, the Borrower shall, promptly upon notice from the 
Association, provide such additional evidence as the Association may 
request, or 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.  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 determines at any time that any amount 
outstanding in the Special Account will not be required to cover payments 
for Eligible Expenditures during the six-month period following such 
determination, the Borrower shall, promptly upon notice from the 
Association, refund to the Association such outstanding amount.
(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 sub-paragraph 
(a), (b) or (c) of this paragraph 6 shall be credited to the Credit 
Account for subsequent withdrawal or for cancellation in accordance with 
the provisions of the Development Credit Agreement.
Annex A to SCHEDULE 1
Operation of Special Account When Withdrawals Are Not 
Made On the Basis of Project Management Reports
1.
For the purposes of this Annex the term “Authorized Allocation” 
means an amount equivalent to $5,000,000 to be withdrawn from the Credit 
Account and deposited into the Special Account pursuant to paragraph 2 of 
this Annex; provided, however, that, unless the Association shall 
otherwise agree, the Authorized Allocation shall be limited to an amount 
equivalent to $2,500,000 until the aggregate amount of withdrawals from 
the Credit Account, plus the total amount of all outstanding special 
commitments entered into by the Association pursuant to Section 5.02 of 
the General Conditions shall equal or exceed the equivalent of 
SDR7,600,000.
2.
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 deposit into 
the Special Account of an amount or amounts which in the aggregate do not 
exceed the Authorized Allocation.  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.
(b)
For replenishment of the Special Account, the Borrower shall 
furnish to the Association requests for deposit into the Special Account 
at such intervals as the Association shall specify. 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 Part B.3 of 
Page  11
Schedule 1 to this Agreement 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. Each such deposit into the Special Account shall be 
withdrawn by the Association from the Credit Account under one or more of 
the Eligible Categories.
3.
The Association shall not be required to make further deposits into 
the Special Account, once the total unwithdrawn amount of the Credit 
minus the total amount of all outstanding special commitments entered 
into by the Association pursuant to Section 5.02 of the General 
Conditions 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 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.
Annex B to SCHEDULE 1
Operation of Special Account When Withdrawals Are 
Made On the Basis of Project Management Reports
1.
Except as the Association may otherwise specify by notice to the 
Borrower, all withdrawals from the Credit Account shall be deposited by 
the Association into the Special Account in accordance with the 
provisions of Schedule 1 to this Agreement. Each such deposit into the 
Special Account shall be withdrawn by the Association from the Credit 
Account under one or more of the Eligible Categories.
2.
Each application for withdrawal from the Credit Account for deposit 
into the Special Account shall be supported by a Project Management 
Report.
3.
Upon receipt of each application for withdrawal of an amount of the 
Credit, the Association shall, on behalf of the Borrower, withdraw from 
the Credit Account and deposit into the Special Account an amount equal 
to the lesser of: (a) the amount so requested; and (b) the amount which 
the Association has determined, based on the Project Management Report 
accompanying said application, is required to be deposited in order to 
finance Eligible Expenditures during the six-month period following the 
date of such report; provided, however, that the amount so deposited, 
when added to the amount indicated by said Project Management Report to 
be remaining in the Special Account, shall not exceed the equivalent of 
$10,000,000.
SCHEDULE 2
Description of the Project
The objective of the Project is to assist the Union Territory and 
the Project States to expand capacity and improve the quality and 
efficiency of technician education to meet the specific economic needs. 
The Project will also aim at increasing access for some disadvantaged 
sections of society (women, scheduled tribes and rural youth) to 
technician education and training.
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 objectives:
Part A:
Development and Expansion of Capacity
Page  12
1.
Establishment of at least six new co-educational polytechnics and a 
skill development center, including construction, equipping and 
furnishing of academic and administrative buildings, workshops, 
laboratories, libraries and other necessary amenities.
2.
Strengthening of at least twelve existing polytechnics and 
introduction of new programs, including construction, equipping and 
furnishing of academic and administrative buildings, workshops, 
laboratories, libraries and other necessary amenities.
3.
Introduction of continuing education and non-formal training 
programs for industry and community.
4.
Provision of student and staff housing facilities.
Part B:
Enhancement of Quality
1.
Modernization of existing laboratories and workshops.
2.
Development and revision of curricula to meet labor market needs.
3.
Staffing of new polytechnics and new programs in existing 
polytechnics.
4.
Provision of faculty and staff training (including scholarships, 
stipends, fellowships and study tours).
5.
Increased utilization of learning resources and media.
6.
Promoting interaction with industry and community.
Part C:
Improvement of Efficiency
1.
Establishment and strengthening of Directorates and Councils/Boards 
of Technical Education in the Project States and the Union Territory, the 
National Project Directorate, and the National and State/Union Territory 
level Project Implementation Units.
2.
Conducting research studies (including studies for systemic 
reforms).
3.
Development and institution of computer-based project and financial 
management systems.
4.
Provision of substantial academic, financial and administrative 
autonomy with accountability to project polytechnics.
5.
Networking of project polytechnics with other 
institutions/organizations.
6.
Enhancing state-level policy support for technician education.
* * 
*
The Project is expected to be completed by December 31, 2005.
SCHEDULE 3
Project Implementation
1. 
The Borrower shall, by April 1, 2001, jointly with the Project 
States, develop and institute and thereafter maintain fellowship training 
programs, including study tours, agreed to by the Borrower and the 
Association.
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2.
The Borrower shall: (a) develop and establish a Management 
Information System (MIS) in the National Project Implementation Unit for 
monitoring and supervision of the Project; (b) implement, in conjunction 
with the Project States, a supervision plan agreed to by the Association; 
and (c) undertake, in conjunction with the Association and the Project 
States, a bi-annual review of Project progress and a Mid-term Review, to 
be completed by December 31, 2003 on the basis of monitorable benchmarks 
agreed to by the Borrower and the Association.
3.
The Borrower shall withhold and cause the Project States to 
withhold the establishment of any new publicly funded polytechnic in the 
Project States without the prior approval of the All India Council for 
Technical Education.
4.
The Borrower shall maintain adequate staff in the National Project 
Implementation Unit and the project polytechnics in the Union Territory 
in accordance with the Schedule of Deployment of Key Additional Staff 
agreed to by the Borrower and the Association.
5.
The Borrower shall enable NPIU to get tracer studies of polytechnic 
graduates, project impact analysis, social/community needs assessment and 
other research studies conducted as required during project 
implementation.