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I think it's shocking to see how many name-sites now give this meaning for 'Lal'. It is simply not correct. This is actually the meaning of 'Lalaa' (short vowel, long vowel) and 'Laalaa'. The first has in fact 3 meanings in Hindi: 1.boy; dear, son (term of address). 2.dear, beloved (term of address to lover or husband). 3. fool, blockhead. The second is probably the origin of the female name, because it means, among other things, 'a term of affectionate address to a child'. In that case the name would be unisex.
The only Hindi word that sounds like 'Lal' is 'Laal', and this means 'red' (strictly speaking it does have a short vowel at the end but this is ignored in Hindi, except in metric verse).
I also don't believe there is a Sanskrit name 'Lal'. There must be a vowel after the final 'L'. In Sanskrit it can not be ignored in case it is short.