Thousands of people had gathered at the temple precincts to witness the fireworks display which were on since midnight when the fire broke out.
The mishap occurred as sparks fell on the storeroom 'Kambapura' and exploded with a deafening noise at around 3.30 AM, police said.
The sound of the explosion could be heard over a km radius and the whole area plunged into darkness as the power supply went off and people ran helter skelter, eyewitnesses said.
Chandy said he has asked the Prime Minister to provide two helicopters at Kollam to ferry the seriously injured.
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The Chief Minister said that the district collector of Kollam had not given permission to conduct the fireworks.
Police sources said a case has been registered against temple authorities and explosive licencees under section 307 (Attempt to murder), and 308 (Attempt to commit culpable homicide) of IPC and under section 4 of Explosives Substances Act.
The Prime Minister, who is rushing to Kerala to take stock of the situation, termed the incident as "heart-rending" and "shocking".
"Fire at temple in Kollam is heart-rending & shocking beyond words. My thoughts are with families of the deceased & prayers with the injured," he said in a tweet.
The Prime Minister has also asked Health Minister J P Nadda to reach the site of the mishap.
A special cabinet meeting will be held at Kollam at 3 PM today to take stock of the situation, he said, adding the priority is to provide help to the injured at the earliest.