Twenty-six persons were feared dead after a boat capsized in Krishna river in Krishna district of Andhra Pradesh.
The Deputy Chief Minister announced Rs five lakh ex-gratia to the families of each of the deceased.
Most of the passengers were said to be members of the Ongole Walkers Club in Prakasam district while some were from Nellore who were on a visit to Vijayawada.
The ill-fated boat was being operated by a private company and was said to be on a trial run.
Three teams of NDRF and other forces were deployed at the Sangamam ghat and professional swimmers who dived in managed to rescue more than 15 persons. Efforts were on to find the remaining seven passengers, the police said, adding that none of the passengers was wearing life jacket. Local media reports suggested the boat was overloaded with passengers and the buoyancy of water changed leading to the disaster.
The Andhra Pradesh Tourism Department has given permission for private agencies to operate boats to Bhavani Island regularly.
The boat exceeded its maximum carrying capacity of 24.
"Rescue operations are on and they will continue until all have been traced", a local police officer told AFP on condition of anonymity.
Chief minister N Chandrababu Naidu expressed shock over the incident and directed the authorities to intensify rescue operations.