NEW DELHI: The Indian economy expanded 7.3% in the year ended March, in line with the initial forecast and marginally higher than 6.9% recorded in the previous year, pointing to a soft recovery and strengthening the case for a rate cut on June 2 when Reserve Bank reviews monetary policy.The data released by India’s statistics office on Friday showed gross domestic product (GDP) rose 7.5% in January-March 2015 compared with 6.7% —after a downward revision from 7.5% — in the October quarter, signalling a slight pickup. This comes as the US said on Friday that its GDP contracted 0.7% owing to shipping delays, dollar dominance and a harsh cold season.The January-March growth is ahead of 7% recorded by China, in line with independent forecasts that India is set to take on the man tle of fastest-growing large economy in the current fiscal. China’s economy expanded 7.4% in the 2014 calendar year.“There is a huge scope with all the steps the government has taken and will take in the course of the year. Our potential to grow into a higher league is certainly there,” FM Arun Jaitley said, adding the economy had been held back by the agriculture sector because of a poor monsoon last year, calling for greater investment in irrigation. The weather office has said this year’s monsoon may also be rain-deficient.Experts raised doubts about the new GDP numbers saying the seemingly strong growth was not consistent with feedback from the field. The sharp downward revision in third-quarter growth to 6.6% from 7.5% estimated initially added to the doubts. There has been some debate about the economic numbers generated after India adopted a new data series earlier this year. “There is some disconnect between the GDP numbers and the situation on the ground,” said DK Joshi, chief economist at Crisil, adding that the central bank may choose to ignore the latest data. Still, he expects RBI to cut rates by 25 basis points.In particular, experts are concerned with the 9.5% growth in credit in FY15 and the 2.8% rise in factory output as measured by the Index of Industrial Production (IIP), which they say is not consistent with the high GDP growth.However, a strong 46.2% growth in indirect tax collections in April and a rise of more than 18% in passenger car sales in the same month points to a boost. “Overall, today’s (Friday’s) data depict an economy that is recovering, but at a very gradual pace,” Nomura economist Sonal Varma said, also pencilling in a 25-basispoint reduction in interest rates on June 2.“We expect the cyclical sectors to show a gradual recovery in the coming quarters owing to higher disposable income, easier financial conditions, rising profit margins and continued momentum on project clearances,” she said.Construction, mining and farm sectors underperformed while manufacturing and financial services picked up pace. Gross value added (GVA) for manufacturing sector rose 7.1% in FY15 compared with 5.3% in the previous year, giving a timely boost to the government’s ‘Make in India’ plan. Agriculture value added rose only 0.2% while mining was up 2.4%, both below last year’s levels.Financial services reported 11.5% growth while trade and hotels segment was up 10.7%. The numbers showed a slight pickup in investment as well with gross fixed capital formation, a measure of investment, rising 4.6% in FY15 compared with 3% in FY14.The government appeared satisfied with the way the economy was performing. “The encouraging part of the data is the growth in manufacturing to 7.1% from last year’s 5.3%, which would also mean that we are creating jobs in our growth path,” Finance Secretary Rajiv Mehrishi said.Chief Economic Advisor Arvind Subramanian expects the economy to do much better in the current fiscal and retained his 8.1-8.5% forecast for the year. “The good news is that manufacturing has picked up from last year substantially and also it has picked up from the third quarter,” he said. “The picture looks better,” said chief statistician TCA Anant.The optimism is based on the fourth-quarter numbers and developments since then. Manufacturing growth picked up further in the January-March period, rising to 8.4%, but construction slowed to 1.4% and agriculture contracted 1.4% because of the damage caused by unseasonal rains in March.A start to government spending in the new financial year is also expected to help recovery. The Narendra Modi government was forced to slash spending to remain within the budgeted fiscal deficit of 4.1% of GDP.Data released on Friday showed a fiscal deficit for FY15 at 4% of GDP against the target of 4.1%. Domestic industry also appeared upbeat.“We expect further improvement of the key levers of the economy, going forward, as the government steps up public investment which in the process crowds in private investment to rekindle a new demand cycle in the economy,” the Confederation of Indian Industry said in a statement.The statistics department dismissed concerns over data. “The MCA (ministry of corporate affairs) database allows us to capture a wide range of smaller and medium enterprises unlike earlier when only 5,000 listed companies would be tracked. This is something that analysts would have to keep in mind. There were large revisions in numbers when ASI (Annual Survey of Industries) data would come out earlier because it provided larger coverage,” Anant said.Officials also had an explanation for the downward revision in growth during the October-December quarter. The estimate was issued in the first week of February against the usual practice of end of the second month after the quarter. It said the latest numbers that follow the regular cycle are more robust, dismissing concerns over the revision.