The World Bank loan issue rocked the Andhra Pradesh Assembly Monday as the ruling YSR Congress and the opposition Telugu Desam Party members traded charges, forcing an abrupt adjournment of the House for the day.

For the first time during the current session, the TDP members stormed the Speaker's podium after their leader N Chandrababu Naidu's speech was cut short, even as the YSRC legislators jeered their opposition colleagues.

Amid the din, the government introduced six bills on various subjects, which Chief Minister Y S Jagan Mohan Reddy called historic.

After the Question Hour, Finance and Legislative Affairs Minister Buggana Rajendranath made a statement on the World Bank's decision to drop the 300 million USD loan proposal for the Amaravati Sustainable Infrastructure and Institutional Development Project.

"From all accounts, it is apparent that the previous (TDP) government had completely ignored the adverse environmental, social, financial and economic implications of the new capital city development model."

"Moreover, the actions of the previous government have embarrassed the nation, as it is the first time that an independent panel of the World Bank recommended an investigation into a project that was not yet approved by its board," the Finance Minister said, listing out the chronology of the loan proposal. "Nobody in the world will even think of building a capital city by borrowing money. Cities only evolve," he said.

Leader of Opposition and former chief minister Chandrababu Naidu, however, maintained there was no corruption or irregularities involved in the construction of capital city Amaravati, which the YSRC members dubbed Bhramaravati (an illusionary city).

It was a self-financing project. After all the development, the government would have been left with 7,000-8,000 acres of land that could have been monetised to repay the loans but the YSRC got numerous petitions filed against the project, thereby scuttling the loan, Naidu alleged.

The Jagan Mohan Reddy government left the Centre in an inevitable situation and forced it to withdraw the loan proposal before the World Bank, he added.

As Naidu continued to read out figures from a note, Speaker Tammineni Sitaram said the former could only seek clarification on the Minister's statement but not make a counter-statement.

The ruling side also objected to the opposition leaders speech, following which the Speaker ordered Naidu's mike to be switched off and asked him to conclude.

The Finance Minister then pointed out that contracts for infrastructure development works were awarded at far excess rates to select firms, leading to adverse remarks by the World Bank.

'The contract for laying one km stretch of road was awarded for Rs 32 crore. Is this not looting (of public money)? Are you laying the road to heaven?' Buggana wondered.

In a clear reflection of the lack of understanding and lethargic attitude of the previous government, the World Bank informed that the contracts awarded for seven roads would not be eligible for retroactive financing and the cost would have to be borne by the state government, the minister added.

He said the World Bank did not consider the loan proposal as its inspection panel recommended an investigation into alleged issues of harm and related potential non-compliance with livelihood restoration.

He said Union Department of Economic Affairs requested the state government to convey its stand by July 1 but the latter sought time till July 31 as a detailed inquiry was underway on the matter.

The DEA then demanded a response by July 15 as the Centre had to take a stand on allowing inspection prior to the approval of the project, "a practice that was unprecedented in the history of India's relationship with the World Bank", the minister said.

The state government told the Centre that the DEA may take an apt call on the further course of action and based on its own assessment the Finance Ministry had informed the World Bank to drop the project, he said.

The World Bank was reported to have accepted the DEA proposal and informed it would be happy to support additional proposals for financing from the AP government, the Finance Minister added.