why do oil makes paper translucent even water can't do so ?

Maybe the surface of oil stays flat while water's surface closely follows that of paper.

 

That's only a suggested explanation, strictly nothing sure.

 

An other possibility: oil's index matches that of paper more closely, avoiding diffusion at the many interfaces.

 

Suggestion: try with paper in a glass bottle full of oil and an other one full of water. That will tell if the explanation by smooth surface holds.

An other possibility: oil's index matches that of paper more closely, avoiding diffusion at the many interfaces.

 

This is pretty much the reason. Paper is made of cellulose which has quite a bit of air in between ( in the gaps ). Now when we put oil, it fills those gaps and reduces the scattering at many of the air-cellulose interfaces. Oil's refractive index is not that far from cellulose, so that helps making it more translucent.

I've just made the experiment with a smooth glass full of water (do it with oil if you want) and the paper doesn't get translucent.

 

So rough paper surface is not the proper explanation for water. Optical index matching is a better one.