The children, all in the age group of five to 12, fell sick, after allegedly consuming sweet 'bundi' during the Independence Day celebration at Lipinda Panchayat in Sambalpur district.
The affected students were admitted to the District Headquarters Hospital here.
The students complained of vomitting and dysentery within three hours of eating the sweet.
Though 51 children have so far been discharged from the hospital, remaining 20 kids are under observation, Sambalpur Chief District Medical Officer (CDMO) Kodanda Rao said.
District Collector Samarth Verma, who visited the hospital and enquired about health of the children, said he has ordered an inquiry into the matter.
"The health department officials will find out why the sweet caused discomfort to the children." the Collector said.
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