There were a number of short-term causes of this massacre. In general, they had their genesis in two events. First, there were poor economic conditions in the Punjab in 1919. Second, there was the Rowlatt Act that passed the British Parliament in March of that year. Together, these events led to further problems that led to the Amritsar massacre.
In 1919, the economic situation in the Punjab was bad. The harvest was poor that year. The cost of living went up with food and other necessities becoming more expensive. This caused many Punjabis to be very unhappy, particularly since these problems were added to discontent that arose from the way Punjabi soldiers had been treated during WWI.
To make things worse, the British passed the very harsh Rowlatt Act. This act (actually two acts) essentially stripped away most protections for Indian civil liberties so that the British could crack down on suspected dissidents and rebels. The laws were harsh and there were rumors about the laws that made them seem even worse to the average uneducated Indian who believed the rumors.
These conditions caused protests to occur. This led to the police arresting two protest leaders (one Hindu and one Muslim) in Amritsar. The arrests led to riots in which a white woman was beaten. General Reginald Dyer then ordered that all Indians passing the spot where the beating occurred had to crawl. Soldiers enforced the regulation.
The arrest and the crawl order led to more protests until finally the fateful protest of April 13th, when Dyer’s troops opened fire on the assembled protestors.
Please consult the link below for a more detailed discussion of these events.