Health activists said successive governments had ignored the threat posed by encephalitis as it was a disease that affected poor, malnourished children.
The BRD Medical college has a 100-bed Encephalitis ward where children from eastern Uttar Pradesh and neighbouring Bihar and Nepal are admitted.
Minister for medical education Ashutosh Tandon ruled out disruption in oxygen supply as the reason behind the deaths. Successive governments have faced criticism for not reforming the overburdened public health system which is still plagued with shortage of doctors and dilapidated infrastructure. He also said that alternative arrangements had been made from neighbouring Sant Kabir Nagar district to ensure availability of liquid oxygen for the hospital.
District magistrate Rajeev Rautela said an inquiry committee has been set up to ascertain the exact cause of the deaths and it has been asked to submit its report by Saturday evening.
The prime minister's office on Twitter said that Modi was "monitoring the situation in Gorakhpur" and was in touch with the state authorities.
Two days ago, Chief Minister Yogi Adityanath visited the paediatric ward of the hospital and also inaugurated the ICU, Critical Care Unit and visited the ward where children infected with Japanese encephalitis virus were being treated.
Rautela said that the hospital owed 6.8 million rupees ($106,000) to the company, but added that it had adequate numbers of oxygen cylinders.