The criticality of country-specific scenarios to inform transition risk assessment for the financial sector: A case study for India

Most financial institutions rely on global scenario frameworks such as those from the Network for Greening the Financial System (NGFS). Using India as a case study, this paper argues that while NGFS scenarios offer a standardised framework with accessible results and documentation, they need refinement for national financial systems, which require more granularity and region-specific detail. We compare key socio-economic drivers and energy-system transition variables across NGFS Phase V scenarios and India-specific net-zero studies. We find divergences between the two: NGFS scenarios project lower near-term GDP growth and per capita income than national studies. Across 58 transition indicators from 2020 to 2040, NGFS outcomes aligned with only 48% of the range reported in Indian studies. This suggests NGFS scenarios may misestimate the timing and scale of India’s sectoral transformation, and the resulting financial risk exposure. While our findings are specific to India, they raise questions worth investigating elsewhere. Based on this analysis, we offer three recommendations: (1) NGFS scenarios should be better calibrated to national circumstances if they are to be used for national planning; (2) national central banks are the natural choice to lead development of complementary national scenarios; (3) Sustained capacity building within financial institutions is essential, alongside structured dialogue with modellers and banks.

Dhandhania, K., Malik, A., Varma, R., Chaturvedi, V., The criticality of country-specific scenarios to inform transition risk assessment for the financial sector: A case study for India, Energy and Climate Change, Volume 7, 2026, 100255
https://doi.org/10.1016/j.egycc.2026.100255