Arundhati Roy’s The God of Small Things characterizes Velutha as “The God of Loss” and “The God of Small Things.” Living in a social setting where the “Big Things” (such as social positions and political connections) prevail, Velutha is viewed as a “Small Thing” or an “untouchable.” Regardless of his status in the society, Velutha exudes incessant generosity when he shares small gifts (love and compassion) with various characters in this story, including Ammu, Estha, and Rahel, hence wins the title “The God of Small Things.” In a society plagued with social injustices and cruelty, Velutha shows unconditional love. In the name of sympathy and love, however, Velutha loses a lot from these small gifts he advances to other people, and this earns him the title “The God of Loss.” His love for Ammu makes him lose his job and ultimately his life.

Arundhati Roy's novel uses Velutha's character to discuss the stigma of untouchability. Velutha, a Paravan, belongs to the lowest social order. He is a handsome young man of extraordinary skills. With his professional training in carpentry, he is an indispensable worker at the Kochamma factory. According to Chacko, Velutha "practically runs the factory." Unlike his humble and servile father, Velutha is bold, fearless, and adventurous.

Velutha represents the "God of Small Things." He enters the imaginary world of the dizygotic twins and fills their lives with happiness and innocence. To Rahel and Estha, he is the father they never had. He transgresses social boundaries and dares to love Ammu, a woman of the higher social order. Velutha is born to lose. He pays the price of love and becomes a victim to a depraved power game.

Velutha's character reflects the deep suffering and the acute frustration of the weaker section of the society. His brutal and tragic death leaves the reader with a lasting sense of loss and injustice.

One of the major issues that is presented in this excellent novel is that of caste and social stratification. Velutha is an "untouchable," a Dalit who occupies the lowest social stratum of Indian society. Velutha lives with his father,Vallya Paapen, and his crippled and paralysed brother, Kuttappen, in a little hut downriver from Rahel and Estha's house. Velutha is great friends with the children, although this is officially prohibited.

It was when Velutha was a child that Mammachi noticed Velutha's skill with his hands, and thus persuaded Velutha's father to send him to a special school for the untouchables. This education had the impact of making him not "safe" as an adult. As his father reflects, what Velutha has as an adult is a kind of self-assurance that "could be construed as insolence" in a touchable. He works in the pickle factory and has skill both with machines and with wood. He is also involved in the Communist party. It is clear that his position as untouchable does not sit easily with him

However, his real involvement comes when he becomes involved in an affair with Ammu, which transgresses the "love laws" that the novel repeatedly mentions. This leads him to being blamed for the rape and murder of Sophie Mol, even though he had nothing to do with it, and his cruel treatment at the hands of the police. It is this event, and Estha and Rahel's complicity with it, that haunts the two twins so strongly and creates the central tension of the novel as they try to come to terms with what happened and their role in it.