Velutha is Vellya Paapen's younger son. He's also Estha and Rahel's best friend, even though he's only three years younger than their mother. We first meet Velutha in 1969 when the family is on its way to the movie theater. Rahel sees him marching in the street with the rest of the communists. We learn then that several years ago, he disappeared and nobody knew where he was, though there were plenty of rumors about him (including that he had been to prison).
When we see him participating in the march, he has been back in Ayemenem for five months and has been working for Mammachi as the factory carpenter. We learn that he's an Untouchable, at the bottom of the social totem pole. A lot of the other factory workers are frustrated that someone who is supposed to be beneath them is earning so much respect.
It's hard to name a part of Velutha's life that isn't shaped by his social status or political beliefs. His relationship with Ammu is perhaps the most important example. As a kid, Velutha used to make little wooden toys for Ammu, though he would have to place them in her outstretched hand so he wouldn't touch her. Eventually she stopped flattening her hand out, and by allowing him to touch her, Ammu broke down the social barriers that divide them.
Even though Ammu comes to realize that she's in love with Velutha, however, she warns Estha and Rahel not to spend too much time with him, because she knows that it can only lead to trouble. She has a hard time telling herself the same thing, though, when she realizes just how, well, hot he is:
She saw the ridges of muscle on Velutha's stomach grow taught and rise under his skin like the divisions on a slab of chocolate. She wondered at how his body had changed – so quietly, from a flat-muscled boy's body into a man's body. Contoured and hard. A swimmer's body. A swimmer-carpenter's body. Polished with a high-wax body polish.He had high cheekbones and a white, sudden smile. (8.80-81)
Whew, we need a cold shower. But seriously, Velutha's relationship with Ammu shows us the way he chooses to disregard societal rules in favor of love, and how this decision, however much we think it is the right one for him, is ultimately his downfall. Velutha, by our standards, doesn't do anything wrong by loving Ammu, and vice versa. Still, we see how his low social standing allows him to become an easy scapegoat. The police feel little remorse for brutally beating him. The narrator doesn't just show us, but also tells us that Velutha doesn't deserve what he gets. His death is shaped by his social class, just as his life was.