"Parliament is in session. I think the first information we should give, should be to parliament. Prime minister has conveyed his deep anguish," External Affairs Minister Salman Khurshid told reporters here.
He said the government was "extremely distressed" over the development.
"Details of what has happened we would like to share with Parliament. I can only say that it is a terrible psychological and emotional setback for all of us," he said.
The minister said any long-lasting relationship between the two countries has to be between the people. "I think that is a relationship that has been hurt by this terrible tragedy," he said.
"My heart goes out to the family. I understand their pain their anguish. I just pray that god will give them strength to bear this loss," he said, adding: "Whatever best we can do we will obviously do".
Sarabjit Singh, who was admitted to a Lahore hospital April 26 after being savagely attacked in jail, died early Thursday. He had suffered serious head injuries and had been on ventilator support since then.
Sarabjit Singh had been on a death row in Pakistan since 1990 after being convicted by Pakistani courts for bomb blasts in Lahore and Multan that left 14 people dead.