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The incident took place on August 20 and the accused has been identified as Adiba Khan, they said.
Khan initially told the police that her daughter drowned in a bucket of water at their residence, DCP (southeast) Chinmoy Biswal said.
The accused said she and her husband rushed the baby to a hospital where she was declared brought dead, he added.
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Police questioned Khan, who was in the house at the time of the incident.
On sustained interrogation, the woman confessed that she killed her daughter as she believed that here family was facing medical and financial issues since the baby was born, Biswal said.
Khan used a dupatta to strangulate the baby, he added.
After strangulating her daughter, the accused put her body inside a bucket of water to show that she died due to drowning, the DCP said.
Then she rushed to inform her husband, a tailor, at his shop. The duo rushed the baby to a hospital where she was declared brought dead, he said.