The blast occurred at 8.30 AM, completely destroying at least two buildings-- one in which explosive material for digging wells was stored and an adjacent restaurant, and damaging several houses, officials said.
"89 people have been killed in the explosion," Block Medical Officer Urmila Choyal told PTI.
The explosion took place in the building of Rajendra Kasawa who has a licence to use explosive material for digging wells in rocky areas.
In the vicinity of the restaurant, a large number of daily wage labourers were sitting when the explosion occurred.
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Besides many persons were there inside the restaurant which is a major eatery in the area, an eyewitness said.
One of the injured, Narsingh (42), said body parts were strewn in the area after the blast.
"We have seen them flying and falling on the ground. Vehicles specially two-wheelers were badly damaged and lying on the road," he said.
State Home Minister Babulal Gaur said a high-level inquiry has been ordered into the incident.
Expressing anguish over the loss of lives, Chief Minister Shivraj Singh Chouhan announced an ex-gratia of Rs 2 lakh each to kin of the deceased and Rs 50,000 for those injured.
"We have performed autopsy so far on 60 bodies. Rest are lying in the premises for post-mortem," Chief Medical Officer Arun Sharma said.
Among the victims were a large number of labourers who were waiting in area for their daily work. Besides some people going to Gujarat were also standing near the hotel for tea and snacks and majority of them were either killed or injured in the blast, a police official said.
"Only those people survived who ran away from the spot but they too suffered injuries," Narsingh said and claimed nearly 150 people were injured.
A large number of people were also trapped in the retuarant located in an adjacent three-storey building, he said.