There is more than a little truth in what she's saying, but I still think her claims fall apart under close scrutiny. I'm going to take a slightly different tack than Sepoy does, however, when he defends English-language South Asian fiction from what he calls the "gallows of authenticity." (Sepoy has a way with words!)
My interest is in the overlapping question of narratorial "distance" that Roy refers to toward the end of her piece.
Bajwa, Suri and Swarup appropriate the lives of people whom they do not understand; unlike Bibhutibhushan, who lived Apu’s life of deprivation in the city and the village, unlike Mulk Raj Anand, who saw at first hand what the humiliations of an untouchable encompassed, they are at a remove from their subjects.
Yes, that's true about Bajwa and Suri (I haven't read Swarup, so I can't say). They are at some distance from their subjects. In Rupa Bajwa's The Sari Shop, it's a real problem -- one senses she has more in common with the wealthy clients in the novel than with the lower middle-class sari seller who is her protagonist. (I still rather enjoyed reading the book, except perhaps for the ill-conceived ending.)
But it's also true of every preceding generation of Indian writers, especially those who have tried to represent the perspectives of non-elite Indians. Mulk Raj Anand may have seen the humiliations of untouchability, but he was not an untouchable himself. Moreover, he himself wrote in English, was inspired by British modernism, and got started only after spending time abroad. He was as much inflicted by 'distance' as the more recent writers Roy names.
Monica Ali does a more sophisticated version of the same thing, using a journalist’s techniques and a ham playwright’s voice when she employs pidgin English to convey the pathos of a Bangladeshi woman’s letters from the village to a luckier relative abroad. This does not make their novels any less entertaining, in the cases of Bajwa and Swarup, or any less well-written, in the case of Monica Ali and Manil Suri. But it does set up a constant, low-level interference that prevents an astute reader from engaging with their novels at a deeper level.
The pidgin English in Brick Lane is troubling at first. But it quickly becomes clear that Ali isn't using it to represent a person who writes poorly in English. Rather, the character of the sister (Hasina) in the novel writes poorly in Bengali. The pidgin is not necessarily a comment on an uneducated women's command of English so much as it is an attempt to represent a character whose literacy is limited. Obviously, Ali is quite different from her character Hasina -- we wouldn't have this novel if that weren't the case -- but given the social conditions of Hasina's life in Dhaka, the use of Pidgin seems appropriate. It is in keeping with Ali's realism, and it is far from disrespectful.
In my view Roy's reference to a "deeper level" of engagement with the South Asian fiction she mentions is a red herring. There is no "deeper level"; there are merely story, characters, and language.
In a nutshell: all writers, Desi and non-desi, deal with the problem of distance from their subjects. Good writers convince us that they've crossed that distance. Less talented (or less experienced) writers leave room for us to question the gap.