A very large number of children live without parental care in the entire world. Poverty is considered to be the main reason behind institutionalization of the children because 80% of children living in care have at least one parent alive. The present paper emphasizes on the trends of institutional care in India where the large population is poor. Keeping in view the socio-economic conditions of the country, it is an attempt to explore the challenges and living conditions of children in institutional care run by government and non-governmental organizations in the regions of Punjab and Chandigarh in northern India. The findings of the study are based on the empirical data that included around 177 institutionalized children both boys and girls between the age group of 5 and 18 years living in four different children’s institutions. The study also provides suitable recommendations for better alternative care in countries with large populations of vulnerable children.