In Clear Light of Day by Anita Desai, the novel's setting greatly affects the narrative, because many of the events in the story are directly related to its Indian environment.

The story's protagonist is Bim Das, a teacher who cares for her autistic brother, Baba, in their home in Old Delhi. Bim's sister Tara lives in Washington DC with her diplomat husband, Bakul, and their two teenage daughters. Tara and Bakul are currently visiting Bim because they are planning to attend the wedding of the oldest Das sibling, Raja. Bim, however, is not going to attend the wedding, because she carries a grudge against Raja. Bim is also resentful because Tara has left India and lives an exciting American life while she is stuck in their old home caring for her younger brother.

The story then flashes back to the Das siblings' younger days. The narrative follows the conflicts between Hindus and Muslims that affect the family and eventually lead Raja away, something that is specific to India. Raja turns his back on Bim, with whom he has always been close, and eventually marries the daughter of his Muslim mentor and becomes a businessman.

The narrative also reveals the difficulties the siblings experience while growing up, as both their parents die and they are raised by their Aunt Mira, who eventually turns to alcohol and becomes insane.

Bim and Tara discuss their past and air their grievances, and they begin to come to terms with the events of their lives. Bim's anger eventually fades as she starts to accept her life in India and the experiences of her brothers and sister as well as the events of her own life.

The conflicts and characters of this novel depend upon its setting in India. The conflicts would have been much different, for instance, if the siblings had been raised in England or America, and the characters themselves would have been different as well. Their Indian culture has shaped them and their relationships.