Symbolism, Imagery, Allegory
When Lakshmi changes from her mountain clothes to the fancy clothes that Auntie Bimla gives her near the border, she stuffs her old clothes into her small bundle.
So why is this important? Well, clothing often represents something more than what it is in literature, and in this case Lakshmi's changing of clothes foreshadows the changing of identities and the new life stage that she's about to embark on.
Which makes it all the more devastating when Lakshmi says, "I feel more naked than dressed inside it" (52.NewClothes.6) about her fancy new clothes. And when Lakshmi understands for the first time the work she is expected to do at Happiness House, she bites the man who is accosting her and runs down the hall to the small room, where she pulls "my old clothes out of my bundle" (69.OldMan.18). Her clothes represent her old life—a life she desperately wants back.
When Lakshmi is trapped in the small room and Mumtaz is trying to break her spirit with beatings and rapes, Lakshmi unwraps her bundle from home and buries her face "in the fabric of my old skirt" (84.BetweenTwilights.1) to breathe in the smell of home.
But when she has been in the brothel a while and unwraps her clothes once more from her bundle, Lakshmi can no longer smell home; her clothes "became just a ragged skirt and a tattered shawl" (101.WhatIsMissingNow.4). And with this shift in the scent of her clothing, we understand that Lakshmi has come a very long way from where she once was—both geographically and mentally.
Lakshmi gives Harish a gift of a soccer ball that she makes out of her old shawl. And when she does we can see that if her clothes used to remind her of her old home, perhaps this gift symbolizes that Harish and the friendship he provides Lakshmi are a sort of small home in their own right.
Importantly, when she watches Harish leave the brothel with the ball she says, "a piece of me has left Happiness House" (124.SomethingfortheDavidBeckhamBoy.7)—and when she packs to leave with the third American, she packs her old homespun skirt from Nepal. With Harish we can see this is a sliver of hope—Lakshmi may be stuck at Happiness House, but something connected with her true is leaving—but we can also see it as a sliver of sadness, since Harish is her friend and so the piece of Lakshmi that is leaving just might be the happiest piece.
But when she packs her skirt to leave with the third American, we are confident this symbolizes a return to Lakshmi's true self. She has been beaten and discouraged, but she is ready to reconnect with her roots and carry forward.