The narrator of The God of Small Things is not a character in the story, but rather tells the story from a distance. He or she moves the narrative forward by delving into each character's perspective, showing us how things look from where they're standing. This strategy works well with the general style of the writing, where we're picking up bits and pieces of the plot as we go. (For more on this, see "Writing Style"). Similarly, the narrator gives us bits and pieces of information about each character, including information unknown to others – for example, Baby Kochamma's diaries, Estha's private fears, and Velutha and Ammu's long-brewing love.
That said, even though the narrator approximates the thoughts of a number of characters while staying outside the action (a technique called free indirect discourse – learn to love it!), it's worth noting that we spend a large chunk of the novel following Rahel around, both as a child and as an adult. As a result, it's sometimes easy to slip into thinking that the entire novel is told from Rahel's point of view. In fact, our omniscient narrator manages to get us to experience multiple points of view by the time we turn the last page.