Situational Irony: The Title
Raju was a tour guide, tried guiding Rosie's career as a dancer, and posed as a sage who was supposed to guide people to spirituality. He as the title character/protagonist never quite succeeded in his responsibility; rather, he violated the definition of guidance. Ironically, Velan, a minor character, guides the protagonist to his transformation by designating him a sage, holding him accountable, and believing in him.
Situational Irony: Fasting
Raju telling the story of a swami who fasted for greater good is highly ironic since he finally has to fast himself. He had become used to telling stories, making up stories, and generally saying whatever sounded good to the people listening to him without ever thinking it might come back around to him. Indeed, it does karmically come back to him in the most dramatic fashion in that he has to become the very swami that he fabricated and nearly dies (or perhaps does die) in the process.
Verbal Irony: Raju's Intelligence
Raju hates school and does not finish it. He avoids education and scoffs at academics. His learning only comes from random books that filter into the railway station that he works at for a few years. Thus, it is amusing and ironic that Narayan writes, "The thing that had really bothered him was that he might sound too brilliant in everything he said" (24). Raju is far from being brilliant and he is mostly making up, fudging, or confusing the stories he tells to the gullible villagers.
Situational and Verbal Irony: Marco and Raju
Marco hires Raju to help him explore the caves so he can carry out his studies. On the way to them, Marco takes the lead even though Raju is the guide. Raju calls him out on this and says he is not a guide. The irony is subtle, but it is clearly present. Raju may be the official guide but he is clueless. He can take Marco to the caves but he neither knows what the markings within them truly mean (he grows very bored) nor does he have any idea how to guide himself through life.