Deputy Chief Minister Manish Sisodia today announced the compensation and also ordered a magisterial probe into the matter to ascertain whether there was any lapse of the school authorities or at the hospital.
"This is a very tragic episode and the government views it very seriously. The Delhi cabinet has decided to pay Rs one crore to Mukesh Kumar's family and will support the family in all possible ways," said Sisodia, who also holds education portfolio.
The victim later died during treatment at the hospital last night.
Sisodia had yesterday visited him after he got to know about the incident.
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One of the accused, who is juvenile, has been detained while another person has been arrested.
Sisodia also made an appeal to the parents to talk to their children and make them understand that teachers are well-intentioned.
The Deputy CM said it was important for the government as well as parents to restore the morale of the teachers who are shaken after this incident, and added the safety concerns of the teachers need to be addressed by all.