S&P on Wednesday retained India's sovereign rating at 'BBB-' with a stable outlook, saying that while risks to growth are rising, the economy and fiscal position will stabilise and begin to recover from 2021 onwards.

"While risks to India's long-term growth rate are rising, ongoing economic reforms, if executed well, should keep the country's growth rate ahead of peers," S&P said in a statement.

S&P has forecast India's economy to shrink by 5 per cent this fiscal.

"The stable outlook reflects our expectation that India's economy will recover following the containment of Covid-19 pandemic and the country will maintain its sound net external position," S&P said while affirming India's rating at 'BBB-' and maintaining a stable outlook.

The stable outlook also assumes that the government's fiscal deficit will recede markedly following a multi-year high in fiscal year 2021, it added.