Finance Minister Palaniappan Chidambaram told an economics conference that growth would 'moderate' in the current financial year to March 2009 but he was confident it would rebound in the second half of next year.

'The general outlook continues to be one of cautious optimism,' Mr Chidambaram said, promising 'counter-cyclical measures' such as higher spending on infrastructure to counter the global economic crisis.

He forecast growth for Asia's third-largest economy of seven to eight per cent for the current financial year, which would make it the second-fastest-growing major economy globally after giant neighbour China, whose economy has also been slowing.

India's economy has expanded by at least nine percent for the past three years.

'The macroeconomic impact of the global financial turmoil has been muted due to the overall strength of domestic demand' in the country of more than 1.1 billion people, the finance ministry said in a report prepared for the conference.

Britain, Japan, Germany, the United States and other developed nations may be in recession or on the brink of recession - defined as two straight quarters of negative growth, Chidambaram said.

But India was in no such danger, he added.

'We must banish thought of a recession,' Chidambaram told the conference, noting the economy expanded in the first quarter by 7.9 per cent and saying the 'second quarter will, undoubtedly, show high positive growth.'

The minister has been resolutely upbeat about India's economic prospects despite increasingly gloomy data that economists say point to a possibly deeper slowdown.

Private economists expect growth as low as 6.8 per cent this financial year and 5.5 per cent next year.

The Congress party-led government is anxious to ensure the domestic economy stays on track with national elections due by May 2009.

Late last week, a senior government official warned India's textile sector would shed half a million jobs by April 2009 due to falling export orders.

The sector employs 38 million workers and is India's second-largest foreign exchange earner. -- AFP