5 Best Government Schemes for Your Daughter's Bright Future: International Day of the Girl Child

Despite the recognition of International Girls' Day, there is still much work to be done to enhance the lives of girls around the world. One of the most crucial opportunities that can shape a girl's future is financial security, and that's where investment schemes for a girl child come into play.

Investing in a girl's future is not just a wise financial decision but also a powerful means to break down barriers and foster gender equality. In many cultures, girls continue to face unequal access to education, healthcare, and economic resources. By providing them with financial support and investment opportunities, we can pave the way for a brighter future where girls have the freedom to pursue their dreams and aspirations without hindrance.

In this article, we will throw light on the 5 best government investment schemes for a girl child in India. These schemes are designed to empower girls from an early age, instilling in them financial literacy and independence.

1. Sukanya Samriddhi Yojana (SSY):

The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme aimed at promoting the welfare and equal rights of girls in India. This initiative seeks to provide financial security for the future aspirations of a girl child, including higher education and weddings.

Here are some key features of the SSY:

• Only one account can be opened in the name of a girl child by her parents or legal guardians at any bank or post office.

• The Sukanya Samriddhi Yojana interest rate for the Q3 FY 2023-24 is 8% per annum.

• The girl child must be 10 years old or younger at the time of account opening and the scheme has a lock-in period of 21 years.

• Initial investments can start as low as Rs 250 and go up to Rs 1,50,000.

• Deposits can be made into the account until 15 years from the opening date.

• Partial withdrawals are allowed after the girl child turns 18.

• A maximum of two accounts are allowed per family, one for each girl child.

• The scheme provides a tax benefit known as the EEE (Exempt, Exempt, Exempt) feature under Section 80C and assures stable, risk-free fixed returns. The EEE feature signifies that the initial investment qualifies for a tax deduction, the returns are exempt from taxation, and the maturity amount remains untaxed.

2. Public Provident Fund (PPF) Account for a Girl Child:

The Public Provident Fund (PPF) scheme in India stands as a testament to the government's commitment to providing individuals with a secure and lucrative long-term investment avenue. While the scheme is not specifically designed for a girl child, the benefits offered are worth considering for a long-term investment for your daughter’s bright future.

Since its inception in 1968, the PPF scheme has encouraged the cultivation of a culture rooted in prudent financial planning and long-term investment. It is currently offering a fixed interest rate of 7.1% p.a.

Since there are no minimum or maximum age restrictions for opening a PPF account, individuals can open a PPF Account in the name of a minor girl and handle it on her behalf until the girl child reaches the age of 18.

One can start investing in PPF with as little as Rs 100 per month. Furthermore, it allows you to invest a minimum of Rs 500 and a maximum of Rs 1,50,000 per financial year, either in a lump sum or in a maximum of 12 instalments.

Investors can open PPF accounts in almost all public and private sector banks across India, as well as post offices, making it a readily available option for people from all walks of life.

The PPF stands as a low-risk investment option with guaranteed returns, backed by the Indian government. This, coupled with its loan facility, where individuals can get a Loan Against PPF after maintaining it for three years, adds a layer of financial security for account holders.

To top it all off, while the scheme has a maturity period of 15 years, it allows for partial withdrawals, starting from the seventh financial year, providing the flexibility and liquidity needed to meet various financial goals of your girl child.

3. Beti Bachao Beti Padhao:

Prime Minister Narendra Modi introduced the Beti Bachao Beti Padhao (BBBP) Scheme in Panipat, Haryana, on January 22, 2015. The primary objective of this initiative is to safeguard girls from social challenges like gender-based abortions and to promote the education of female children on a global scale. The Prime Minister extended the BBBP program across the entire country on March 08, 2018.

Here are the key features of the Beti Bachao Beti Padhao (BBBP) Scheme:

• BBBP is a Central Government initiative that provides full financial support to the district-level component, with funds directly transferred to the District Collector's account to ensure smooth implementation.

• This educational program aims to bring about changes in socio-economic attitudes and does not necessarily involve immediate cash disbursements.

• In this scheme, participants are required to make a minimum deposit of Rs 1,000 into either a post office or a national bank account. This deposit can be made over the course of the following 14 years.

• Parents are granted the option to withdraw 50% of the deposited amount when their daughter reaches the age of 18. The remaining balance can be withdrawn when she turns 21.

• The Beti Bachao Beti Padhao scheme guarantees that parents can set aside funds for their daughter's future higher education and marriage.

• The maximum annual deposit limit for individuals in this account is Rs 1.5 lakh.

• The government contributes funds to the beneficiary's account.

4. UDAAN - CBSE Scholarship Program:

UDAAN - CBSE Scholarship Program is an initiative introduced by the Central Board of Secondary Education (CBSE) in collaboration with the Ministry of Human Resource Development (MHRD) to tackle two pressing issues: the underrepresentation of female students in prestigious engineering institutions and the gap in teaching between school education and engineering entrance exams.

The primary objective is to create a platform that empowers young women, enabling them to pursue their dreams of entering esteemed engineering institutions and play a significant role in nation-building.

Here are the key features of the UDAAN - CBSE Scholarship Program:

• The program focuses on enhancing the teaching and learning of Science and Mathematics at the school level by addressing three crucial aspects of education: curriculum design, teaching methods, and assessment.

• It offers free offline and online courses through virtual weekend contact classes, along with study materials, to students during their 11th and 12th-grade years, preparing them for admission tests to premier engineering colleges across India.

• All female students studying in 11th grade in Kendriya Vidyalayas (KVs), Navodaya Vidyalayas (NVs), government schools, or any recognised board affiliated with CBSE in India are eligible to apply.

• Student selection is based on merit and is associated with the city chosen by the candidate for the weekly virtual contact classes.

• Eligible students must be enrolled in the 11th grade with a focus on Physics, Chemistry, and Mathematics (PCM) subjects.

• Minimum academic requirements include scoring at least 70% overall in Class X and achieving 80% marks in Science and Mathematics. For boards following the CGPA system, a minimum CGPA of 8 and a CGPA of 9 in Science and Mathematics are required.

• Reservation policies in line with JEE (Advanced) are applicable: OBC (NCL) - 27%, SC - 15%, ST - 7.5%, and PWD - 3% of seats are reserved in each category.

• The annual family income of the applicant should not exceed Rs 6 lakhs per annum.

5. Balika Samridhi Yojana:

The Balika Samridhi Yojana is a program similar to the Sukanya Samriddhi Yojana, offering limited savings opportunities for parents with daughters.

Here are the key features of the scheme:

• This scheme is exclusively available for newborn girls.

• An amount of Rs. 500 is granted upon the birth of each girl child.

• During their school years, the girl child receives an annual scholarship ranging from Rs. 300 to Rs. 1000 until she completes Grade X.

• The maximum age for enrolment of the child is 10 years.

• Each household is eligible to participate in this scheme for a maximum of two of their daughters.

• The depositor must belong to a family categorised as 'Below Poverty Line.'

• Accounts can be opened at your nearest bank, although only specific banks are authorised to process applications under this program.

These are the 5 best government investment schemes for a girl child in India. While these schemes help promote gender equality and foster financial independence for girls, there are two more noteworthy options that are not essentially backed by the government.

Let's explore two crucial investment options that you must consider, especially if you are willing to invest a large sum for your daughter's future:

1. Bank Fixed Deposits:

A Fixed Deposit, also known as an FD or Term Deposit, is a financial product offered by banks, Non-Banking Financial Companies (NBFCs), and post offices to enable investors to save their money and earn attractive returns securely.

Here are the key features of Bank Fixed Deposits:

• With a Fixed Deposit account, individuals can invest their savings for a specific period at a fixed interest rate.

• Upon the maturity of the deposit, customers receive a lump sum amount. Different financial institutions offer varying interest rates based on the chosen Fixed Deposit term.

• The interest rate on a Fixed Deposit is assured and remains constant, unaffected by market fluctuations.

• Even if the financial institution changes the interest rate for that particular term, they are obligated to honour the initial interest rate offered at the time of opening the Fixed Deposit.

• Customers can select a deposit term (duration) from the available options, typically ranging from 7 days to 10 years.

• Premature withdrawals or partial withdrawals are subject to premature withdrawal charges.

• Various types of Fixed Deposits are available, including Flexi Fixed Deposits, Senior Citizen Fixed Deposits, Tax Saving Fixed Deposits, and Children's Fixed Deposits, among others.

2. Children's Gift Funds:

Given the rising inflation rates and the low interest rates associated with conventional instruments, it becomes imperative to adopt a smarter approach to plan for your daughter's future needs.

The rising inflation and economic uncertainty underscore the importance of investing in avenues like equity mutual funds that have the potential to outperform inflation. Given the nature of returns and the required time horizon for planning for a child's future, Children's Gift Funds can be a preferred choice.

When it comes to long-term investment strategies, equities are the most suitable asset class. Some equity funds are explicitly tailored for children's financial future needs, featuring extended lock-in periods that encourage long-term investing. These child-oriented mutual funds are categorised as solution-oriented equity mutual funds.

As per SEBI regulations, these funds have a lock-in period of 5 years or until the child reaches the age of majority (i.e., 18 years), whichever comes first. Parents can select a flexible lock-in period, ranging from 5 years to the child's age of maturity, aligning with their financial goals.

These funds are managed as hybrid funds, which is a combination of both equity and debt. More conservative investors can opt for a higher allocation to the debt component within the scheme's portfolio. Investing in these Children's Gift Mutual Funds can be tailored based on the available time horizon and the parent's risk appetite.

Keep in mind that switching to another scheme is not possible if the solution-oriented scheme underperforms during the lock-in period. Most fund houses impose penalties for early liquidation of Children's Funds before the minimum lock-in period of 5 years.

To know more about mutual fund investment for your child's future, I recommend you read these articles:

How to Invest in Mutual Funds for Your Child's Future

3 Mutual Funds for Planning Your Child's Future Needs in 2023

To conclude:

As we celebrate the International Day of the Girl Child, it is crucial to prioritise the financial well-being and empowerment of our daughters. These five government-backed investment schemes offer a strong foundation for securing their future.

However, exploring non-government options is equally vital for those seeking to make more substantial investments. By combining these diverse financial avenues, we can ensure that our daughters not only receive quality education and financial security but also thrive as empowered individuals, poised to embrace the opportunities and challenges that lie ahead.

On this International Day of the Girl Child, let's take a step towards securing a brighter, more equitable future for every girl who will shape our future!

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.