Vidya was born in the Tamil-speaking Balan family on January 1, 1978 in Palghat, Kerala, India. She studied in St. Anthony's Convent School, and thereafter in St. Xavier's College from where she obtained a degree in Sociology. She then went on to obtain a Masters degree in Sociology from Bombay University. She also studied and performed in Prithvi Theaters' workshops. Due to tradition of most Tamil-Iyer families, Vidya and her sister Priya learned Carnatic dance form during their early childhood days, but Vidya opted out as the dance classes took place early on Sunday mornings and as she is not an early riser. Considerably overweight during her school-days, she decided to shed those extra pounds when she elected to opt for modeling and movies. Her first break came with a Malyalam movie 'Chakram' opposite Mohanlal, however,the project was shelved, and she had to wait until 1998 to debut in a Surf Excel commercial. She then went on to appear in several commercials directed by Pradeep Sarkar. She also appeared in three music videos for Pankaj Udhas, Euphoria, and Shubha Mudgal in supporting roles. She then also appeared in two TV serials Ekta Kapoor's 'Hum Paanch', and Ashok Pandit's 'Hanste Khelte'.
During 2006 Vidya was approached by Vidhu Vinod Chopra during a pop-concert in Mumbai to play a lead role in 'Parineeta'. She then had to undergo 17 make-up shoots and 40 screen tests before being chosen for this role. All this hard work did result in success as 'Parineeta'.
