First off, let me say that I really enjoyed this story. It's writing style and main character, James, kept bringing my favorite book, The Catcher in the Rye by J. D. Salinger to mind for one reason or another.
That being said, I feel like James often felt sort of...obligated, so to speak, to lie. I get this impression, because it's depicted that he is a very reserved sort of individual who keeps to himself, but hints that he realizes that his mother is often troubled by this part of his personality. Which, I think, sort of embedded this strong sense of expectation in him at a young age. He seems to be acutely aware of the fact that others expect certain things from him, and that when he doesn't deliver, he ends up letting someone down in one way or another.
A good example of what I'm talking about is when he lets his mother believe that his father died in his bed. He knew that it helped her to think about his death as having happened that way. It helped her cope with his death, and gave her comfort. So, he felt compelled to stay quiet about the 'truth' and not tell her the reality of what had happened.
Another example is the letter to his friend that is first mentioned at the every beginning of the story. A thousand years ago, when people actually still used snail-mail, you wouldn't just write to someone about the trivial things of life. That would be boring. Receiving a letter is meant to be something exciting. Thus, James didn't feel like he should write to his friend just to tell him that life was going on as per usual. That would only disappoint his friend after getting him all worked up over finding a letter addressed to him in the mail. I think that's why he wrote the letter with a much more gripping, albeit fake, story as opposed to just saying that his life was still just as dull as it was before his friend moved away.
I think this reasoning is backed up a third time by the way the story ends. James notices how the woman pesters everyone about where they're from and where they're going. I think he recognizes this as her way of keeping herself from getting worked up over their bad luck or maybe just to keep herself from growing bored. He probably registers how this is a similar mechanism to that of his father making jokes to ease tense situations. When she turns her attention to him, he feels like he needs to help her out by coming up with something really good. So, he weaves an elaborate story that captures the attention of all of those around him. He pretends to speak Tibetan to the train's passengers, because it lulls them. It calms them down by taking their minds off of the storm and the broken down bus. That's what he felt like he needed to do in that situation.
Although, I do not think this is the only reason for his compulsion to lie, but it seemed like the most reoccurring reason shown in the story to me.