There are lots of views on using sign language for babies. It could be interesting to see how fast your baby picks up some of the signs to be able to communicate correctly with you.
There are quite a few things that you could do to increase your baby's vocabulary.
1) First and foremost, don't pressurize your baby to speak. Just let her be while giving her lots of input on all the things that you see. Just keep TALKING a lot to her in ADULT language. It can seem weird but they grasp words quickly.
2) Use lots of picture flashcards (pictures on one side and text on the other) and show her at very fast speed. Note that you would need a thumb holder (available at the stationary section in Popular or other book stores). Gradually, you can encourage her to say the word instead of letting it out.
3) Teach her how to blow if she doesnt know already. You can make an octopus with threads hanging as legs and ask her to blow it. You can make various interesting craft work and ask her to blow. Once she knows how to blow, you can ask her to blow a candle. Also, ask her to blow a whistle to see how much strength she has in her blow. She will be able to pronounce words like P, Kh, etc. that require air to be blown out of the mouth.
4) Listening is the first step to speaking. Babies love nursery rhymes. Rhymes, Finger rhymes, Action rhymes are tools that you can use. Start with simple rhymes like 'Johny Johny' or 'Are you sleeping'. Finger rhymes like 'Two little blackbirds sitting on a wall', Action rhymes like 'Eensy Winsy spider'. Something that is very easy to pick up.
5) Sing regularly to her. Children love music and will start humming and then saying the words in no time.
6) Some children dont speak much because all that they want to say is being understood beforehand. Sometimes, act as if you are just not getting it (without telling her in words that she needs to speak). But, dont do it too often.
7) Read picture books to her everyday and point out the pictures while spelling out the words clearly.
8) Follow her focus of attention. This is something I did a lot while dealing with my child. Instead of asking her to say words that you want her see, you can follow her eyesight and keep giving words to her that SHE is looking at. Say when she is looking at a ball under the sofa. Dont ask her to see a 'bird'. Focus on her object of attention. Tell her, "Yes, get the ball".
9) How to speak to your child: Speak short simple sentences of 3-4 words in a sentence. Break up all your conversation into short sentences. For example: "I am hungry. I need food". Say a bit loudly but slowly with lots of intonation in your voice.
10) Use lots of play sounds while you play with him/her. Children love it. Let her be surrounded by lots of 'Swishhhh', 'vroom vroom', 'Crashhh', 'Splashh', 'baa baa', 'moo moo', 'tick tock' and so on.
11) Use a lot of repetition. Look, there's the ball. Its a blue ball. Can u throw the ball? Give the ball to Daddy.
12) Repeat what she says or is meaning to say back to her in meaningful words without showing that you are correcting her.
13) DONT ask questions. Dont let her feel the discomfort of being asked to speak. Let it come naturally.
14) DON'T comment on the way she is expected to speak or say that she does not speak to all your friends. Children catch messages very fast.
15) Make sure its not too noisy when you are speaking to her. Anything that could distract her attention can be tuned off, like the television, phone etc.
Activities for a 16-20 month old: Make a game of naming the parts of her body. Teach her the sounds that animals make. She would also love activities like scribbling with colour pencils, banging drums, building a tower of cups, fitting, filling emptying etc.
You will find many more activites in my blog earlier posts in the category 'Children Activities'.
Your baby will talk eventually. So, do not stress or over pressurize him/her to talk. And in case you suspect that your child has a speech problem, schedule an appointment with a speech therapist as soon as possible if the above techniques dont work.