Central government schemes for girl child - Oneassure

In India, the need for separate schemes for the girl child stems from a range of historical, social, and economic factors. Among other things, there has been evident discrimination against them in terms of education, health and nutrition. Government schemes for girl child intend to fill this gap and encourage gender balance in the country.

Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana (SSY) is a government savings scheme in India specifically designed for the financial empowerment of the girl child. Launched in January 2015 as part of the "Beti Bachao Beti Padhao" campaign, the scheme allows parents to ensure that their daughter gets the essential future financial support she deserves to achieve all her life goals. Here’s a breakdown of the scheme:

a) Purpose

SSY is one of many government schemes for girl child intended to provide financial security for the girl child’s future. It encourages parents to save regularly for their daughters. However the broader goal is to improve the social status of and empower girls in India. The scheme achieves this goal by offering a combination of tax benefit, high interest rates, and a secure savings mechanism to parents.

b) What it offers

These are the major benefits provided under Sukanya Samriddhi Yojana:

> High interest rates: higher interest rate compared to other savings schemes making it a good long-term savings option. The rate is revised quarterly by the government; as of the latest update, it is around 7.6% per annum (subject to change).

> Tax benefits: Contributions to the SSY qualify for tax deductions under Section 80C of the Income Tax Act, up to the limit of ₹1.5 lakh per annum. Additionally, the interest earned on deposit and the final maturity amount (including principal and interest) remains tax-free.

> Safe investment: SSY is a government-backed scheme and hence considered to have minimal risk involved.

> Flexible deposit amount: Investors can deposit anywhere between a few hundred rupees to ₹1.5 lakh per annum.

> Partial withdrawals: Partial withdrawal of up to 50% of the balance as of the previous financial year is allowed for educational expenses once the girl child turns 18 years old.

> Premature closure: The account can be closed prematurely under exceptional circumstances, subject to specific conditions.

The account matures when the girl child turns 21 years old or upon her marriage after turning 18 years old, whichever comes first. On maturity, the entire balance, including the interest earned, is paid out to the account holder or her guardian. The account allows for the nomination of a beneficiary, ensuring transfer of funds on the unfortunate event of death of the account holder or guardian.

c) Eligibility

The account can be opened in the name of a girl child who is below the age of 10 years. A single account can be opened for each girl child, and a family can open accounts for a maximum of two girl children (three in case of twins or triplets).

How to open SSY account

An SSY account can be opened in any post office or authorized private and public sector banks across the country. It cannot be opened online. Documents required to open an SSY account are as follows:

> SSY account opening form (Form SSA-1, available online for download)

> Birth certificate of the girl child

> Identification of parent or guardian (pan/ aadhaar/ voter id)

> Address proof (driver’s license/ electricity bill/ telephone bill)

> Medical certificate if account is for multiple children (triplets)

Other documents may be requested by the bank or post office. Once you make your first deposit (minimum ₹250) the authorities will take a few days to process your application. After successful verification SSY account will be active and you will be issued a passbook.

Current interest rates

The interest rate you get in Sukanya Samriddhi Yojana account is currently 8.2% per annum. This interest rate is applicable from Jan 2024. This is more than the previous rate of 8.0%. Compound interest on an SSY account is calculated every year. You can use various compound interest calculators available online or calculate it manually using this formula: 

Interest amount  = principal amount Invested (1+ rate of return / 100 ) ^ number of years

Following table shows how SSY interest rates have fluctuated over the years:

Deposits and withdrawal

Deposits can be made in a lump sum or through monthly installments. Deposits can be made in cash, cheque, demand draft or through online transfer (NEFT) on the Indian Post Payments Bank (IPBB) app. If you deposit less than the minimum amount of ₹250 in a financial year, your account will default. You will have to pay a penalty of ₹50 to reactivate your account. No interest is earned on deposits above the maximum limit i.e. ₹1,50,000. You can withdraw the excess amount at any time by submission of a filled out withdrawal form along with required documents, such as identity proof, address proof, fees slip (if withdrawal is for education).

More ongoing central government schemes for girl child

Over the years, various schemes have been introduced to address gender based disparities. Following are some previous government efforts to aid gender equality that are still ongoing:

a) Balika Samridhi Yojana (BSY)

The Balika Samriddhi Yojana (BSY) is a government scheme for girl child launched in 1997. It is  aimed at improving the welfare of the girl child from families that fall below the poverty line. It does so by providing cash benefits for the girl at different stages of her life.

This girl child benefit program is available in both urban and rural areas. 

b) National scheme of incentives to girls for secondary education

The National Scheme of Incentives to Girls for Secondary Education (NSIGSE) is a government initiative launched in the year 2008. It encourages families from economically disadvantaged backgrounds to enroll and retain their daughters in secondary education. It does so by providing financial incentives to the families to cover various educational expenses. A one-time scholarship amount (₹3000) is deposited into a savings account opened in the name of the girl. She can later withdraw this amount with high interest once she reaches the age of 18. To be eligible for this scheme, the girl should be below the age of 16, have passed class 8 and enrolled in class 9 of a government run school.

Sukanya Samriddhi Yojana vs. Child insurance plan

For those looking for investment plans for their children, it is important to consider the advantages and disadvantages of investing in Sukanya Scheme and child insurance plans.

Both SSY and CIP investments are eligible for tax exemptions under Section 80C of the Income Tax Act, 1961. To learn more tax-saving tips read our blogs.

Conclusion

These govt schemes for girl child reflect a broader commitment to gender equality and the empowerment of girls, ensuring they have the support needed to achieve their full potential. As we compare these schemes with other financial products like child insurance plans, it becomes clear that while each option has its own set of benefits and limitations, the ultimate goal remains the same: securing a better future for the girl child and promoting gender balance in the country. 

With proper guidance and comparison of plans you can ensure a secure feature for your child. Contact Oneassure to find the best insurance plans tailored to your needs. To educate yourself on more insurance related topics read our blogs here.