Reported experimental and computational fluid dynamic (CFD) studies have demonstrated significant power augmentation of diffuser shrouded horizontal axis micro wind turbine compared to bare turbine. These studies also found the degree of augmentation is strongly dependent on the shape and geometry of the diffuser such as length and expansion angle. However study flow field over the rotor blades in shrouded turbine has not received much attention. In this paper, CFD simulations of an experimental diffuser shrouded micro wind turbine have been carried out with the aim to understand the mechanisms underpinning the power augmentation phenomenon. The simulations provide insight of the flow field over the blades of bare wind turbine and of shrouded one elucidating the augmentation mechanisms. From the analysis, sub-atmospheric back pressure leading to velocity augmentation at the inlet of diffuser and lowering the static pressure on blade suction sides have been identified as th dominant mechanisms driving the power augmentation. And effective augmentation was achieved for ${lambda}$ above certain value. For the case turbine it is ${lambda}$ greater than ${approx}2$.