Indian police have sent reinforcements to a northern city to head off tensions after the murder of a two-year-old girl over an unpaid $144 loan.

Police said two suspects have been detained after the girl's body was discovered on a rubbish dump in Aligarh, in Uttar Pradesh state after she was abducted on May 31.

Officers said a medical report found the toddler was strangled with a cloth.

The body was hidden at the home of one of the accused but later thrown onto the garbage dump because it started decomposing in the summer heat, police said.

"The girl's grandfather owed the accused money and they had an argument" over the delay in repaying the 10,000 rupees ($144), Aakash Kulhari, Aligarh police chief, told AFP.

Kulhari said the initial postmortem examination had ruled out rape but that samples had been sent for further examination to determine if there had been a sexual assault.

Five police officers have been suspended for "dereliction of duty", he said.

A Twitter hashtag of the girl's name has gone viral, with many users demanding capital punishment in the case.

"The brutal murder in Aligarh is yet another inhuman, unspeakable crime against an innocent child," said Priyanka Gandhi, a senior leader of the opposition Congress party. "What has become of us?"

Other leading politicians and sports and Bollywood stars also expressed anger on Twitter.

Reported crimes against children have increased five-fold in the past decade in India.

According to the national crime records bureau almost 2,000 children were murdered, 55,000 kidnaped and close to 13,000 sexually assaulted in 2016.