The Mundan ceremony, or Chadakarana, is a Hindu rite, or saṃskāra, in which a child receives his/her first haircut.

This sanskara is performed typically during the first or third year of age. The child’s hair is shorn, frequently leaving only the sikha, a tuft at the crown of the head.

In tradition, the hair from birth is associated with undesirable traits from past lives. Thus at the time of the mundan, the child is freshly shaven to signify freedom from the past and moving into the future. The rite is performed as a special ceremony in most homes, for young girls and boys.

At Rishikesh, on the banks of the Ganges, there is a special chadakarana sanskara/mundan ceremony. In this ceremony, Vedic mantras and prayers are chanted by trained priests, acharyas and rishikumars. The child's head is shaven and the hair is then symbolically offered to the holy river. The child and his/her family then perform a sacred yagna ceremony and the Ganga Aarti.
source; http://en.wikipedia.org/wiki/Mundan _ceremony

Answered by Tingtong , an ibibo Master, at 3:38 PM on November 10, 2008