If you have a daughter below 10, the Sukanya Samriddhi Yojana (SSY) is a better alternative to the PPF. The SSY offers a higher interest rate of 8.5% and enjoys the same tax benefits as the PPF.

But there are certain drawbacks, such as restrictions on withdrawals and a longer lock-in period. Like the PPF, the interest rate of the scheme might be cut in the future as interest rates come down. The government bond yield to which the scheme is linked is now hovering around 6.4%. Analysts believe the rates will eventually have to be aligned with the bond yields as per the formula suggested by the Gopinath panel.

Even so, the SSY is the best debt instrument for saving for your daughter's future requirements. Accounts can be opened at any post office or designated branches of PSU banks and select private banks with a minimum investment of `1,000. Every year, you must invest at least `1,000 in the account. There is also an investment limit of `1.5 lakh in a financial year.

You can open accounts for up to two girls, but the combined limit cannot exceed `1.5 lakh. The account matures when the girl turns 21, though up to 50% of the corpus can be withdrawn after she is 18.