Divers were searching for victims of the accident, which occurred in Rewa district, 530 kilometres (328 miles) east of Madhya Pradesh state capital Bhopal, police said.
The bus, which was carrying about 45 people, "fell into the lake while negotiating a bend. Four people have been rescued so far," a police official said.
Road accidents are frequent in India. They are often blamed on overcrowding, reckless driving and ageing vehicles.

Copyright AFP (Agence France-Presse), 2006