"The train came and it ran over the people who were there. The people were standing on and near the track," senior local police official Parbhjot Singh told CNN.
The incident took place in Amritsar, located in Punjab state, to mark the Hindu festival of Dussehra.
Singh said celebrants were burning an effigy when the train barreled through the crowds.
Deepak Kumar, spokesperson for Indian Railways, which operates the national rail system, confirmed that there was only one train involved in the accident. During fireworks and loud cheering, those standing on and around the tracks apparently did not hear the oncoming train.
Photos and videos of the accident show show bodies lying around the track with mourners hovering over them.
Local officials and law enforcement were trying to determine the extent of the casualties.
Prime Minister Narendra Modi tweeted prayers and his condolences and said he "asked officials to provide immediate assistance that is required" to the victims of the accident.
Indian officials went to the site of the accident to personally oversee rescue operations.
Punjab Chief Minister Capt. Amarinder Singh said on Twitter his government would be giving 500,000 rupees, or five lakhs, to the families of each person who died in the accident. That would amount to $6,805.50 per family.
He tweeted that all offices and schools are closed as the state remains in mourning.
Free treatment at government and private hospitals would also be offered to those injured, said Singh.
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