The message seems to be out of date. In version 4 that setting exists in two files, and you need to change it in the other one, which is:
%APPDATA%\sqldeveloper\1.0.0.0.0\product.conf
Which you might need to expand to your actual APPDATA, which will be something like C:\Users\cprasad\AppData\Roaming. In that file you will see the SetJavaHome is currently going to be set to the path to your Java 1.8 location, so change that as you did in the sqldeveloper.conf:
SetJavaHome C:\Program Files\Java\jdk1.7.0_60\bin\
If the settig is blank (in both files, I think) then it should prompt you to pick the JDK location when you launch it, if you prefer.