Why is the Modi government not controlling the fuel prices?

Fiscal discipline.

It is relatively easy for a politician to give subsidies, handouts, price cuts. These all help people in the short term and help the politician get votes. However, they screw the country in the long term.

BJP workers would want Modi to cut oil prices. It is a quick way to appease their vote bank [middle class] and help them win elections. Why would Modi want to piss off the common people and lose votes? So many businesses that fund the BJP rely on petrol/diesel and would not reducing prices help the BJP appease them and get more funding? Is keeping high petrol prices helping Modi/BJP in any way?

When governments try to subsidise petrol/diesel [like they did in the past], there is a huge cost to the government. Somebody has to pay for it. Either more taxes on something else or less government spending on social programs. And paradoxically by trying to control petrol price, you take on so much debt that the inflation shoots up.

In fact, by maintaining the fiscal discipline the government is keeping the overall inflation low — India's August inflation seen easing below RBI's mid-term target : Reuters poll — despite the oil prices. It is the overall inflation that common people get affected the most — as that’s what affects their finances.

In fact, in 2018 budget [last budget of this term] Jaitley went for a little overspending — but still not out of control spending like in the previous era — to make it easy for their party workers to get some votes.

Figure: How much the government overspends?

It is easy for political parties to hoodwink people by reducing petrol prices [seen immediately] and lead to a process that increases overall inflation [often hidden in the short term]. But, Modi is resisting that temptation [for now]. When Modi starts cutting petrol prices [without decrease in crude prices] you can realise that the vote campaign mode is on. As a whole fiscal discipline is putting the economy in a healthy mode — growth without inflation.

Source:https://www.quora.com/Why-is-the-Modi-government-not-controlling-the-fuel-prices