Shruti has a nice post about bannig child labour. Here is what I think about it.
A relative of mine teaches at a Government School in Haryana. If you ask her, she will tell you that on days the meals are being distributed, rather for those few hours, the number of kids at the school is almost three times the usual. The rest of them never attend school.
The Mid-Day meals have been there for quite some time, but Child Labour is still rampant.
You are right when you say that banning won't help reduce child labour, but the thing is that banning it is better than doing nothing. Your post for example, is nice, but doesn't give us any new answers, which is what we need.
I like Atanu's explanation on the subject.
The way out is to address the complex of causes which leads to the effect which is millions of children being denied a childhood. The rational solution would involve, first of all, implementing policies which prevent the birth of too many unwanted children. “Family planning” vigorously implemented. But then, no political party has the guts to do so. Next, make it a law that a child laborer has to be paid the same wages as an adult. This would give employers no reason to employ children when for the same wages they can have an adult worker. Third, provide schools and meals at schools (breakfast, lunch, and dinner) for all children. This would make schools attractive for those children who are poor enough to have to work for food. Finally, provide very poor parents a monthly stipend if their children attend school regularly. This would help them make ends meet without having to send their children to work. THEN, and only then, pass a law banning child labor.
Even here, family planning is almost here, meals are almost here too. But one important suggestion is to provide a stipend to poor parents whose kids go to school.
Now where might all that money come from? From stopping the utter wastage of funds by our useless politicians. (link). Then the millions which are going to be spent due to increase of seats due to reservation.
It really doesn't seem like our PM is an economist. Does it? Hope he didn't flunk.