First reports on Thursday had put the toll at 40 dead in Rewa district, 530 kilometres (330 miles) east of the Madhya Pradesh state capital Bhopal.
But after divers completed search operations, police superintendent Ravi Gupta told the Press Trust of India news agency that only seven passengers had managed to swim to safety and 56 had perished.
Seventeen women were among the dead, he said.
The initial investigation suggested the steering on the bus may have broken before the vehicle crashed through a mud barrier into the water.
Road accidents are frequent in India and are often blamed on overcrowding, reckless driving and poorly-maintained vehicles.

Copyright AFP (Agence France-Presse), 2006