Thirty more children remain ill in hospital after consuming lunch cooked at the village school, said the education minister of Bihar state, PK Shahi.
"It is sad but true that 20 children died after eating their midday meal, which appears to be poisonous," said Shahi.
The 20 children, all aged under 10, were buried near the school on Wednesday morning as hundreds of residents protested at the deaths.
"Hundreds of angry people staged a protest in Saran [district] since late Tuesday night, demanding stern action against government officials responsible for this shocking incident," said district government official SK Mall.
A preliminary investigation has shown the meal of lentils and rice served to the children on Tuesday may have contained traces of phosphate from insecticide, said local government official Amarjeet Sinha.
Poisoning
The cause of death could be organophosphorous poisoning due to insecticide in the vegetables, he said, adding that doctors were treating victims with atropine.
A more detailed investigation is under way into the tragedy at the state-run school in the village of Masrakh in Bihar's Saran district, the official said.
Media reports quoted villagers as saying the use of contaminated, foul-smelling mustard oil for cooking at the school could also have caused the deaths.
"Investigators are examining midday meal samples and samples of victims' vomit. Only the final report of inquiry will reveal the real cause," Sinha said.
State chief minister Nitish Kumar has announced compensation of 200 000 rupees ($3 373) for bereaved families.
Free lunches are offered to impoverished students in state-run schools as part of government welfare measures in many of India's 29 states.
School attendance
Bihar is one of the country's poorest and most densely-populated states.
Educators see the midday meal scheme as a way to increase school attendance. But children often suffer from food poisoning due to poor hygiene in kitchens and occasionally sub-standard food.
More than 130 students were taken to hospital in the western city of Pune last year after eating lunch at school, the Times of India reported.
A probe revealed that the food served to them was contaminated with E coli bacteria, strains of which can cause food poisoning.
Food prices have soared in India over the last six years, causing increased hardship for the 455-million people estimated by the World Bank to live below the poverty line. – AFP