Aiming towards the liquefaction of paddy straw was accumulation as well as providing a technically viable route leading to preservation of the natural resources and environment, the paddy straw was chemically liquefied. Paddy straw were liquefied into bio-based polyol in the presence of castor oil and blend of castor and karanja oil as depolymerizing agent and P-Toluene sulfonic acid as catalyst. Liquefied product was characterized by chemical as well as analytical techniques. The agricultural waste base paddy straw was eventually converted into polymeric precursor (polyol) monomer with nearly 80 to 95% yield by employing 2% catalyst concentration and at optimized temperature of 180°C. Synthesized polyol can be utilized further in formulating high quality rigid polyurethane foams. The foams were characterized in terms of their physical, mechanical, thermal and morphological properties. All foams exhibit good compressive strengths and thermal stability. Thermal conductivity of foams varied between 0.012 and 0.023 Kcal/mh°C, with the lowest being of foam from liquefied (LP), making it suitable for utilization as an insulation material.