Lakshmi was born in Coimbatore, Tamil Nadu in 1944. She grew up in Mumbai and Bangalore. She obtained her Bachelor of Arts from Madras Christian College and MA in Bangalore and her PhD from Jawaharlal Nehru University, New Delhi. Her dissertation was on American policy towards refugees fleeing Hungary due to the failed revolution of 1956. After completing her education, she worked as a school teacher and college lecturer in Tamil Nadu. She is married to Vishnu Mathur, a film maker, and lives in Mumbai.