"I wrote this book so much in my mother's company it feels almost like her book," 35-year-old Kiran told the BBC.
Kiran said "it was seven, almost eight years of work, writing half stories, quarter stories, stories in eighths, of broken people, difficult lives and I picked the novel out of it.
"It was quite a difficult, emotional experience for me. I think I was devastated and sad by the end of the book."
The Inheritance of Loss tells the story of a Cambridge-educated Indian judge who lives a reclusive retirement in the foothills of the Himalayas. But the arrival of his orphaned teenage granddaughter, and his cook's son's attempts to keep one step ahead of the US immigration department, threatens to shatter his peace.
Desai herself lived in India until the age of 15, when she moved to England to continue her education, and currently lives in the US.
She said she returned to India to write parts of the novel. "I went back to write the Indian bits in India, so it wasn't entirely from a distance." Kiran's mother was not at London's Guildhall to hear her daughter scoop the prestigious prize.
"I think she was so terrified on my behalf that she retreated as far as she could," Kiran said. "She gave me lots of advice and now she is without a phone and without a television in a village in India." The judges hailed The Inheritance of Loss as "a magnificent novel of humane breadth and wisdom, comic tenderness and powerful political acuteness".
Hermione Lee, chairwoman of the judges, said, "I think her mother would be proud. It is clear to those of us who have read Anita Desai that Kiran Desai has learned from her mother's work. "Both write not just about India but about Indian communities in the world."
"The remarkable thing about Kiran Desai is that she is aware of her Anglo-Indian inheritance - of V S Naipaul and R K Narayan and Salman Rushdie - but she does something pioneering," Lee said.
"She seems to jump on from those traditions and create something which is absolutely of its own. The book is movingly strong in its humanity and I think that in the end is why it won."
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