The city's average air quality index (AQI) stood at 220 at 12 noon, improving from 263 at 4 pm on Monday.
Production, storage and sale of firecrackers in the capital will be punishable with a fine of up to Rs 5,000 and three years jail under Section 9B of the Explosives Act, the minister told a press conference in New Delhi.
Skies over Delhi hung heavy with smoke and its air quality inched towards "severe" category on Diwali night as people burst firecrackers in a blatant disregard to the government's ban against it, imposed amid an increase in the contribution from farm fires.