As Slumdog Millionaire became a global box office success and 'the feel-good film of the decade' in early 2009, its depiction of India was also hitting the headlines for very different reasons. The film tells the 'rags-to-rajah' story of Jamal Malik, from his roots in Mumbai's notorious Dharavi slum through to his dramatic success on Who Wants to Be a Millionaire.

Slumdog was a hit with audiences around the world, yet some in both India and the West took offence at its portrayal of India's poor. Writing in the Telegraph, Alice Miles declared that 'the film revels in violence, degradation and horror... Slumdog Millionaire is poverty porn'. Indian commentators soon took up the phrase: some agreeing that the film was a sensationalised 'poverty tour' that perpetuated western stereotypes of India; others dismissing the term 'poverty porn' and instead heaping praise on a powerful depiction of life in the slums.

Even Bollywood heavyweight Amitabh Bachchan entered the debate on his blog, writing that 'if SM projects India as [a] Third World, dirty, underbelly developing nation and causes pain and disgust among nationalists and patriots, let it be known that a murky underbelly exists and thrives even in the most developed nations.'

As these comments suggest, the film has really struck a nerve in India. Most controversial of all is its presentation of slumdwellers in Dharavi, a square mile settlement that is home to an estimated one million people right in the heart of the financial and entertainment capital of modern India.

Slumdog does not shy away from depicting this murky underbelly of Mumbai. The film was shot in large part with small hand-held digital cameras on location in Dharavi and other Mumbai slums. Row upon row of low-lying tin roofs, dilapidated shacks and tarpaulins are dissected by tightly-packed alleyways and overflowing drains. Cesspits and mounds of garbage provide the backdrop to dusty barefoot children running through narrow lanes with dirt on their clothes and buzzing flies around their heads.

The film took me back to my time working for the Urban Slums Department of Udaipur-based charity Seva Mandir. The slums of Udaipur were nothing like the size or scale of Dharavi but the environment was familiar. I still remember vividly the first time I visited Shivaji Nagar – a slum right by the city's railway station yet as far away from the world of the tourists arriving by train as could be imagined – and winced at the sight of flies buzzing round the enormous sores that peppered the arms and legs of the children. I cannot forget the horror I felt when taken by local resident Ram Lal to see his daughter Meena, who lay in the family's sole bed with 70% of her body covered in burns from the petrol that her husband had poured over her and set light to. She was about my age. Her two young children sat playing in the dirt nearby.

When Slumdog is criticised for exaggerating the squalid conditions of slum life in India, I think of the children of Shivaji Nagar. I remember Ram Lal and Meena and their daily struggle to survive. I wonder whether they would think the film is a fair portrayal of their lives. Perhaps they would welcome the chance to show priveleged cinema-goers around the world the reality of the hardships they endure?

Indeed, Slumdog Millionaire is a powerful reminder that the slumdwellers and poor of India cannot be ignored in the country's development. Dharavi may represent an extreme example of poverty but it is just the tip of the iceberg. According to the Indian Government, a massive 77% of Indians live on less than 20 rupees (or about 30p) a day. The vast majority of the country's workers are found in the informal labour sector with no job or social security. They work on the land as agricultural labourers and farmers, toil in dangerous jobs in quarries and brick kilns, or scrape a living as street vendors or ragpickers. Many live without basic services like running water and sanitation, and some have little or no access to healthcare and education. This is the reality of life for millions of Indians.

Yet there is so much more to Indian slums than just hardship and horror; and it is in this respect that I think Slumdog Millionaire does real justice to the slumdwellers. In Slumdog, we see a Dharavi that is thriving and teeming with life. The slum is a warren of small houses, shops, stalls and cottage industries. There are barbers and furniture makers, women beating brightly coloured laundry, chickens clucking and children playing. The overall impression is of a constant buzz of activity: there is enterprise on every corner and resourcefulness in every home. The slum is seething with an irrepressible energy.

I saw this extraordinary energy and resourcefulness in so many of the slums that I visited. Ram Lal carved simple yet beautiful statues of deities to sell by the roadside; others made graters, pots and pans, knives, jewellery, locks and keys. Some commuted to be labourers in nearby quarries or had saved up money to buy a rickshaw. Others gathered scraps of plastic and rags to sell for recycling. Women put aside 10 rupees a month in self-help groups to fund the purchase of essential household items like furniture. People tried their best to live their lives with dignity in difficult circumstances – just as they did in Slumdog's very human portrayal of Jamal's childhood in Dharavi.

As Slumdog highlights, the resilience and resourcefulness shown by Indian slumdwellers should not be underestimated. The annual turnover of the small enterprises based in the square mile of land that makes up Dharavi is reckoned to be nearly US$700 million. That is no mean feat for an area that some see as the murky underbelly of the emerging Indian Tiger.

Nonetheless, the fact that 77% of the population can still live on under 20 rupees a day highlights the fact that the much-hyped Indian economic boom has had little positive impact on vast swathes of the country's population. The 300 million-strong army of the advancing middle class that has benefited from the boom is increasingly leaving behind the rest. Indian society is becoming increasingly polarised.

The effects of this economic polarisation are exacerbated by the indifference often shown by more privileged classes towards their poorer compatriots. In his book The Great Indian Middle Class, former Indian diplomat Pavan K. Varma argues that economically advanced Indians have for decades been preoccupied with material gain and have failed to acknowledge – let alone engage with – the real issues facing their country. The depth of poverty in India is just the latest of the issues they ignore.

The controversy around the release of Slumdog Millionaire is testament to the fact that it has focused attention on slum poverty at a time when some would like to believe it is not a major issue for the country's development. The film has raised awareness not only of the conditions in which many live their lives, but also of their extraordinary resilience and resourcefulness in the face of such conditions. Far from being crude 'poverty porn', Slumdog has thrust a spotlight on the realities of life for India's poor and opened a debate on a subject that the world cannot afford to ignore.

Katie Boswell