The government plans to give cash incentives to the families of baby girls in an effort to limit the number of abortions of females because of a preference for sons.
Staggered payments would be made to families to "encourage them for better upbringing of girl child and to educate her", women and child development minister Renuka Chowdhury said in a statement released late on Monday.
India has only 927 females for every 1,000 males -- far lower than the worldwide average of 1,050 females.
UNICEF says India continues to lose almost 7,000 girls every day through abortions, while the British medical journal The Lancet has put the loss of females at 10 million over the past two decades.
In India, sons are typically regarded as breadwinners but girls as a burden because of the matrimonial dowry demanded by a groom's family.
Under the scheme, a girl's family will get financial benefits -- including insurance cover -- worth 200,000 rupees (5,000 dollars) until the age of 18 if she is sent to school and is not married young.
The government will spend 100 million rupees (2.5 million dollars) during the next year to kickstart the scheme under which more than 100,000 girls will benefit, the minister said.
"This will force the families to look upon the girl as an asset rather than a liability since her very existence would lead to cash inflow to the family," Chowdhury said.
India has strict laws against sex-selective abortion, but there have been only a handful of prosecutions as medical practioners are reputed to have made it a profitable business.