GK Express of 12/03/2026

🧠 Thought of the Day

“The true laboratory is the mind, where behind illusions we uncover the laws of truth.”

— Jagadish Chandra Bose

📰 Current Affairs

India’s First OTEC Plant: India has launched its first Ocean Thermal Energy Conversion (OTEC) desalination plant in Lakshadweep (Kavaratti), utilizing temperature differences in sea water to generate power and fresh water.
Emergency Gas Allocation: The Ministry of Petroleum and Natural Gas invoked powers under the Essential Commodities Act, 1955 to prioritize natural gas for households and transport due to the ongoing West Asia maritime blockade.

📘 Concept of the Day

Common Equity Tier 1 (CET-1) Ratio

Why is this Topic Important?

The CET-1 ratio is a key financial indicator used to measure the financial strength and stability of banks. It is frequently mentioned in news related to banking regulation.

What is CET-1 Ratio?

The Common Equity Tier 1 (CET-1) Ratio measures a bank's core capital compared to its risk-weighted assets. It shows the bank’s ability to absorb financial losses during economic stress.

Capital – money that a bank holds as financial strength.
Risk-Weighted Assets (RWA) – bank assets adjusted according to their risk level (for example, loans with higher risk are given higher weight).

What is Common Equity Tier 1 Capital?

CET-1 capital represents the highest quality capital that banks use to absorb losses.

Common shares (ordinary shares issued by bank)
Retained earnings (profits kept by the bank instead of paying dividends)
Other disclosed reserves

Formula of CET-1 Ratio

CET-1 Ratio = (Common Equity Tier 1 Capital) ÷ (Risk-Weighted Assets)

Why CET-1 Ratio is Important?

Shows the financial health of banks
Helps banks absorb unexpected losses
Protects depositors' money
Ensures stability of the banking system

Basel III Norms

Under Basel III international banking regulations, banks must maintain a minimum CET-1 ratio to ensure financial stability.

Basel III – global banking regulations developed by the Basel Committee to strengthen bank capital and reduce financial risks.

CET-1 Requirement in India

RBI requires banks to maintain at least 5.5% CET-1 ratio.
With capital conservation buffer, the effective requirement becomes around 7%.

Simple Example

If a bank has ₹100 of risk-weighted assets and ₹10 of CET-1 capital, the CET-1 ratio will be:

CET-1 Ratio = 10 ÷ 100 = 10%

This means the bank has enough core capital to absorb potential losses.

🤔 Think About This

Tap a question to reveal the approach

What are the economic implications of India's high dependence on energy imports passing through the Strait of Hormuz?

Introduction:
The Strait of Hormuz is one of the most important maritime chokepoints in the world, connecting the Persian Gulf with the Arabian Sea. A large share of global oil trade passes through this narrow waterway. India imports more than 50% of its crude oil, and a major portion of these imports pass through the Strait of Hormuz.

Economic Implications for India:

1. Energy Security Risks: Any conflict or blockade in the Strait can disrupt oil supply to India, affecting energy availability.

2. Increase in Oil Prices: Tensions in the region may increase global crude oil prices, leading to higher import bills.

3. Pressure on Current Account Deficit (CAD): Higher oil imports increase India’s trade deficit and weaken the balance of payments.

4. Inflationary Impact: Rising fuel prices increase transportation and production costs, leading to inflation.

5. Impact on Economic Growth: High energy costs can slow industrial production and overall economic growth.

6. Strategic Vulnerability: Dependence on a single chokepoint exposes India to geopolitical tensions in West Asia.

Measures to Reduce Risk:

• Diversification of energy import sources.
• Expansion of strategic petroleum reserves.
• Promotion of renewable energy and domestic production.
• Strengthening maritime security in the Indian Ocean region.

Conclusion:
India’s heavy dependence on energy imports through the Strait of Hormuz creates economic and strategic vulnerabilities. Diversification of energy sources and strengthening energy security policies are essential for long-term economic stability.

Q. How can Ocean Thermal Energy Conversion (OTEC) contribute to India’s "Blue Economy" vision?

Introduction:
Ocean Thermal Energy Conversion (OTEC) is a renewable energy technology that generates electricity using the temperature difference between warm surface water and cold deep ocean water. India’s tropical oceans and long coastline provide favourable conditions for OTEC, making it important for achieving the country’s Blue Economy vision.

Contribution of OTEC to India’s Blue Economy:

1. Renewable Ocean Energy: OTEC provides clean and continuous power from ocean resources, reducing dependence on fossil fuels and supporting sustainable energy development.

2. Power Supply to Island Territories: Remote areas such as Andaman and Nicobar Islands and Lakshadweep can receive stable electricity through OTEC plants.

3. Desalination of Seawater: OTEC systems can produce fresh water from seawater, helping solve drinking water shortages in coastal and island regions.

4. Promotion of Marine-Based Industries: Reliable ocean energy can support fisheries, aquaculture, tourism, and coastal infrastructure.

5. Technological Innovation: Development of OTEC encourages research in ocean engineering, marine science, and renewable technologies.

6. Employment and Economic Growth: It can create jobs in marine technology, construction, and maintenance of ocean energy systems.

Challenges:

• High initial cost of infrastructure.
• Technological and engineering challenges.
• Need for further research and investment.

Conclusion:
OTEC can play a significant role in India’s Blue Economy by providing sustainable ocean energy, improving water availability, and promoting marine-based economic activities while supporting environmental sustainability.

📝 Let’s Write an Exam (PYQ)

Q.1 The "Essential Commodities Act" was originally enacted in which year to control the production, supply, and distribution of specific goods?

1947

1950

1955

1991

The Essential Commodities Act of 1955 gives the government powers to regulate prices and prevent hoarding of items like food, fuel, and medicines.

Q.2 Which index is primarily used in satellite-based geospatial technology to measure the health and density of green cover along National Highways?

CPI Index

NDVI (Normalized Difference Vegetation Index)

Gini Coefficient

Human Development Index

NDVI uses satellite imagery (chlorophyll signals) to measure vegetation health by analyzing how plants reflect light in different wavelengths.

✍️ Answer These Questions

1. What is the full form of 'LPG', often used in households?

2. In which Indian island territory has the first OTEC desalination plant been set up?

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