This tradition is a bit different, I don't know how you will see it, but I too had participated in a similar activity during my school time, but that was quite different.
On children's day, that too some year, A fair was planned in the school as a separate activity and for that children were asked if they wanted to set up any kind of stall. The children who agreed to this would bring something prepared from their homes, either alone or in a group, and would set up a stall of that food in the fair organised inside the school.
Obviously that money remained with the children but I feel that there is another side to all this that it helps children understand the value of money that how much effort their parents put in to earn money, so they have to become responsible and be appreciative of what they have. :)