The setting for Swarup's novel is extremely important. The reader gains much insight about the conditions in which Ram lives and how this impacts the trajectory of the novel. Swarup himself indicates this: "If a British army major can be accused of cheating, then an ignorant tiffin boy from the world's biggest slum can definitely be accused of cheating." The setting of the slum defines much of the novel and its characterizations. The reader understands the physical and emotional difficulties of life in the slum. The slum carries with it a set of fixed parameters and definitions that are difficult to overcome. It is for this reason that Ram works at a job with little opportunity for advancement as a waiter. At the same time, the emotional implications of the setting help to define the social perception that he must have cheated at the quiz show. Ram's mistrust of the world around him is influenced in large part because of the setting of the slum. The slum reveals some of the worst in human behavior and this prevents Ram from seeing more optimism and redemption in consciousness.
Such an impact of setting on the characterization helps to illuminate its importance to the novel. Had Ram lived in an upper class setting and hailed from one of India's strongest universities, he would not have experienced as much in way of condemnation and suspicion. The slum causes Ram to view the world with skepticism and doubt, realities that confront him with his success on the game show. It is in this light where the setting is important to the novel. The promise and possibility of the globalized world is one in which the old traditions of prejudice and discrimination are still present. The setting of the slum demonstrates this. However, as the novel displays, there is a greater chance to overcome these realities, something that was not as evident in the past. The setting is where this paradigm shift is displayed, making it extremely important to the novel's themes.
In Vikas Swarup's novel, the landscape in which the story is set, i.e., the slum, can be argued to be, in and of itself, a character. The slum itself is in Mumbai, one of India's exemplars of the two faces of a city (refer also the movie Dharavi by Sudhir Mishra, and the famed City of Joy by Roland Joffe). The novel's protagonist, Ram Mohammed Thomas (thus named because he is unsure of which religion he was 'born' into) and his growing up in abject poverty is depicted by the slums he lives in - he literally has to rake muck to earn his livelihood. The juxtaposition of this setting with Ram's subsequent good fortune is an interesting device that the author uses to convey the extremes of both conditions - Ram's impoverished background and the sudden stroke of luck that he has to come to terms with.
In layers, Swarup examines various facets of the economic structure of India. The rags-to-riches formula here gets fresh treatment while the narrative also serves as a significant commentary on the class barriers, social divides and discrimination that are sometimes evident in the country even today.
I've linked to two additional related works below.