With a population of 1.2 bn, India is the second-most populated country in the world. Though, in recent years, strong GDP growth has been experienced, yet percentage of persons living below poverty remains is too high, especially among the 70% of the population that resides in rural areas. In decade of 50, Government of India nationalized insurance industry and liberalized in 1999 to allow private insurers. Since then insurance premiums have grown rapidly. India is unique in that the government plays a proactive role in providing insurance to the very poor (those below the $1/per day threshold) through various social security programmers and subsidized insurance schemes. Therefore the micro insurance market in India should largely be regarded as the low-income population living on less than $1/day. The paper discusses the issues and concludes that ‘broad’ social- economic transformation in Indian low-income market which creates enormous scope and need for micro insurance which has an important role in interrupting risk and vulnerability among the chronic poor.