Hoping that the worst is over on inflation, Finance Minister P Chidambaram on Monday said India must banish the thought of recession even though the overall outlook for the economy continues to be of "cautious optimism" in the face of global turbulence.

"I hope the worst is over," Chidambaram said on inflation, inaugurating the annual Economic Editors Conference here. The rate of price rise has declined to 8.90 per cent for second week of November after touching 12.91 in early August.

The Finance Minister said the policy interest rate may moderate if inflation continues to decline and there would be "bias" in favour of growth.

Among the strategies to revive the business confidence, the government is contemplating increasing expenditure on infrastructure projects.

"Increasing expenditure on infrastructure is being contemplated" to address concerns over global slowdown," he said agreeing the country faces a "difficult situation".

Projecting a growth of 7-8 per cent for current fiscal, Chidambaram said, "In our view, we may expect a moderation in growth rate in the current year."