Outside our hotel - the swank Taj - children beggars with lurid deformities were shaking tins. I felt as if I were a voyeur of misery.

I was reminded of my schoolboy visit while reading Katherine Boo's magnificent investigation of the slum underworld of the city known today by its Hindi name, Mumbai.

Boo, a US journalist, does not flinch from addressing Mumbai's social inequalities and the plight of its rubbish-sorting underclass.

Behind the L'Oréal hoardings and billboard adverts for the perfect home ("Beautiful Forever. Forever Beautiful") lie shacks and squatter colonies. Even the vilest and most crime-infested refuse sites are no deterrent to the author as she seeks out waste-pickers and social strays to interview.

Boo's book is the product of four years spent in the Mumbai slum of Annawadi, built in the early 1990s in the shadow of luxury hotels. It could almost pass for a collection of non-fiction short stories.

In the guise of reportage, Boo tells a riveting story. She sets down the humiliations of Annawadi's inhabitants not to horrify the reader - though it does - but to bear witness. To give way to glib moral outrage would tarnish her credibility.

According to the author's account, Annawadi grew around the city's international airport when Tamil construction workers began to squat on government land.

They scraped together a pittance by sifting through the rubbish spewed out daily from hotels. Rotting food, bottle tops and plastic could be sold in bulk to the neighbourhood's recycling plants.

Runaway teenage girls, too, were drawn to Annawadi's waste business. Many of them had been raped back home in the countryside, or been sold to pimps in the city.

Sexual abuse of girls remains commonplace in 21st-century Mumbai, says Boo. Seeking help from the police is often seen as an act of betrayal; Indian girls are expected to bear their abuse. Among the slum's estimated 3000 inhabitants are girls who have been sold by their parents to the local constabulary, and serially raped by them.

During her residency in the slum from 2007 to 2011, Boo videotaped all she saw and heard. Public records and official documents (especially those of the Mumbai police) were scrutinised. Hospitals, morgues and law courts were visited. The author was nothing if not scrupulous. Yet her book contains no footnotes or bibliography as the research has been absorbed invisibly into the narrative.

One of the book's unforgettable real-life characters is Abdul Husain, a refuse-sorter from Uttar Pradesh. As a Muslim, Abdul is looked down on by the Hindu majority. He knows he is of the wrong religion to get a job in the Hyatt or other "glimmerglass" hotels.

His father, in spite of his tuberculosis, toils night and day on the rubbish dumps to feed his family of nine. His work is often dangerous: Annawadi is built on landfill at the sea's edge and even a light rainfall can put the whole slum under flood.

In the end, Boo seems to say, poverty makes a criminal of everyone in Mumbai. The law is enforced as a means to extort money, police detainees are obliged to forsake their savings to have a false criminal charge dropped.

As an ethnology of Indian slum life, Behind the Beautiful Forevers is a masterpiece that ranks with Sonia Faleiro's study of Mumbai's red-light district, Beautiful Thing.

It is useless to describe the singular power of this book; it is, simply, one of the finest works on contemporary India yet.

• 'Behind the Beautiful Forevers' is published by Portobello and is available from Exclusive Books for R216

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