With several brief exceptions, The God of Small Things for the most part takes place in a town called Ayemenem, in Kerala, India. One of the trademarks of the novel is the way it jumps back and forth in time between 1969 and 1993. These jumps in time are just as important in creating the setting of the novel as the geographic space is.
To begin, let's look at Ayemenem in 1969 when Estha and Rahel are kids. The novel's most important moments take place in this setting. Ayemenem in 1969 appears to be in a state of change, which we can see through the generational differences among the characters. The community is starting to embrace Communism, which seeks to empower the poor and working classes, and to eliminate class and caste distinctions.
The older characters – Baby Kochamma, Mammachi, and even Vellya Paapen, who is a victim of the caste system – don't seem to be down with the changes that are starting to happen. They long for the time when everybody's place in society was neatly spelled out for them.
On the other end of the spectrum, you have Rahel and Estha, who are only seven years old and pretty oblivious to social rules. When Rahel sees Velutha waving a communist flag, for example, she sees it more as a cool accessory than a symbol of the social unrest permeating their community.
Those in the middle generation – Ammu, Chacko, and Velutha – seem to have the most complex relationship with the changing times. They simultaneously feel constrained by the social rules of the past and inspired to rebel against them. Chacko declares himself a Marxist, and Ammu and Velutha embark on a forbidden affair. Maybe it's because the plot events of 1969 take place in such a murky social climate that things seem to go totally out of control for everyone.
Ayemenem in 1993 is a much different place. There is no longer the same kind of tension between different groups. The whole political climate is way more subdued, and everything that happened before only exists in memory. Everything is quiet. Baby Kochamma and Kochu Maria spend their days side-by-side eating popcorn and watching TV, letting the house fall to pieces around them. Baby Kochamma's garden turns into an overgrown mess. Even the river, once the unstoppable physical force that took Sophie Mol's life, lies quiet. The Ayemenem of 1993 shows us the eerie aftermath of a tumultuous past.