The incident occurred about two km from the shore when the motorised fishing boat on its way to Ghantasila from Sabulia, carrying 29 persons, sank in the lake after losing balance, a police officer said.
Those onboard the boat were going to Ghantasila for a picnic after attending a wedding yesterday at Sabulia.
Local fishermen and boatmen fished out the bodies of four persons, including two children, while almost rest of all on board the overloaded boat were were brought to the shore by the rescuers and are being treated in hospitals, Ganjam District Collector P C Chaudhury said.
Teams from Odisha Disaster Rapid Action Force and fire brigade personnel were pressed into service for the rescue operation, Chaudhury said, adding local fishermen and police personnel were engaged in searching the missing people.
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Apart from the district collector, IG of police (Southern Range) Amitabh Thakur and senior officials rushed to the site to supervise the rescue operation.
Expressing grief over the incident, Chief Minister Naveen Patnaik has announced Rs 4 lakh ex gratia for families of each of those killed and free treatment of those affected.
"A probe will be conducted and action initiated against the guilty," he said.
The boat had the capacity to carry 10 to 12 persons, and had equipment for fishing in the lake fitted, a police officer said.
Meanwhile, a case has been registered against two boatmen, Dutia Mallick and Bideshi Mallick, for illegally transporting people, Additional Superintendent of Police Gupt Mahakud said.
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