Ricardo on Orissa-West Bengal potato/vegetable trade..

India and its politics is interesting and bizarre at most times.

I am not sure how many of us are following the Orisaa/West Bengal crisis on trading of potatoes and vegetables.

Apparently. Orissa supplies veggies to WB and latter supplies potatoes to Orisaa. Just like Ricardo’s example, it seems WB has comparative adv over potatoes and Orissa over veggies. The two states specialise in their comp adv and trade with each other. Win win for both as our text-books suggest.

Alas, the reality is not as simple. There are lot of other considerations which influence trade and it is not just economics.

So in this case, prices of veggies zoomed in WB. The WB authorities blamed Orissa and put a ban/stay on exporting these potatoes to Orisaa. The result was Orissa faced a potato crunch. (I could only figure this much from different sources. Those who know more on this topic, please throw some more light).

Despite appeals to WB govt, the things keep going in circles and there is no clarity. Sometimes the orders to ban potato export are taken back and sometimes they are reimposed. I am reading Centre has tried to intervene but to no avail. Orissa has formed a task force to look into the matters.

The thing is Potato is a staple crop across the country and ome just can’t do without it. So what shall Orissa do? Should it stop its over-reliance on import of potatoes and try and become self-sufficient. This will undo the trade lessons proposed by Ricardo as self-sufficiency does not help one specialise and grow.

As CMs have grown powerful, they have tended to behave like  State Prime Ministers of their respective states. So it is not as if there are only gains wuth growing Federalism. There are limitations too…

Will be interesting to follow this development going ahead.

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