Vidya was born in Palghat, Kerala, India. Her family consists of her dad, P.R. Balan, who is the Vice-President of ETC Channel; mom - a home-maker, and an elder sister, Priya, who is married to Kedar. She also has an aunt by the name of Raji Raju. The Balan family re-located to live at Road No. 11, near Ambedkar Garden, Chembur, Bombay, when Vidya was very young. 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 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, rather tomboyish, during her school-days, and an ardent fan of Shahrukh Khan, she decided to shed those extra pounds when she elected to opt for modeling and movies. Facing disappointment after being rejected by a Tamil producer, she nevertheless persisted until she got her first break 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 completed nearly 90 such ads. She 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 2003 she was signed-up to play a role in a Bengali movie 'Bhaalo Theko' opposite Joy Sengupta. This project was completed during the year 2006, and was a considerable hit. Then 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' was very well received so much so that the Tamil producer, who had previously rejected her, invited her to appear in a 'Dasavatharam' opposite Kamal Hassan, and now it was Vidya's turn to reject this offer which eventually went to 'Asin'. Apart from acting, Vidya occupies herself for supporting education for young Indians by promoting children's' books; is associated with Americans for Aids Research; with Hale House - that provides support and housing for children born with HIV and drug abuse; as well as hosting forums and attending events for Harvard Aids Institute. When she was single, she was never involved in any scandal and claimed to get along well with both female and male friends. In 2012, she married producer Siddharth Roy Kapur An ardent devotee of Bhagwan Shri Sai Baba, she makes it a point to attend Mandirs every Thursday. She is proficient in Tamil, Malyalam, Hindi, English, Bengali, and can also read Urdu.