Car sales in India rose the fastest in over two years in October on festival buying and easier credit, and analysts said the data firmed up belief the industry was back on track for robust growth.

Firms sold 132,615 cars in October, compared with 99,052 units sold a year ago, data from the Society of Indian Automobile Manufacturers showed. The 34% rise was the steepest since February 2007, when they had jumped an annual 46.5%.

Demand was also stoked by a USD 4-billion payout to government employees as back pay in September, ahead of Diwali, the festival of lights which is an auspicious time for purchases.

"The numbers are showing that the industry is on a growth path again," Vaishali Jajoo, Autos Analyst at Angel Broking said.

Jajoo expects passenger vehicle sales to rise 8-10% in the current fiscal year to March 2010. Firms sold 1.55 million passenger vehicles in 2008/09, flat versus a year ago.

Car sales are also an important gauge of consumer sentiment in the country in the absence of other indicators.

India is a market that holds out hope for global automakers, according to auto analysts and industry officials, showing a 19% rise in car sales since the fiscal year began in April, compared with flat sales in mature markets like Europe and the United States.

On Sunday, Carlos Ghosn, chief executive of the Renault-Nissan alliance, forecast the Indian car market to touch 2 million units in the current fiscal year, and triple in the next 10 years. World over, car makers would sell 60 million units this year and next, he said.

Indian carmakers have sold 821,954 units so far this year, 17.5% more than the same period last year.

Trucks vroom on economy boost

Sales of trucks and buses in India, a key barometer of industrial activity, rose 52% to 42,562 units in October, the fourth straight rise and the strongest expansion since April 2007. They had grown 71.5% then.

India's industrial output has been on an upswing in recent months. Latest data showed the index of industrial production rose 10.4% in August, the fastest in 22 months, and a Reuters poll of analysts indicated it could have risen 7.3% in September.

Motorcycle sales rose 14.2% to 611,828 units in October.