Judge Dharmender Rana said there was little to hold Ravi, a founder of the local chapter of Swedish climate activist Greta Thunberg's "Fridays for Future" movement, in custody any longer.
Her arrest at home in the southern city of Bengaluru earlier this month stoked criticism of repression of dissent in the country.
Police said Ravi was involved in producing and disseminating an action plan that sparked violence during farmers' protests in Delhi. Her lawyers said the arrest was illegal and there was nothing seditious in the toolkit.
"Considering the scanty and sketchy evidence on record, I do not find any palpable reason for keeping a 22-year-old in custody," Judge Rana told a packed courtroom.
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Tens of thousands of farmers have been camped out on the outskirts of New Delhi in bitter cold since December, to protest new agricultural laws they say will hurt them to the benefit of large corporations.
The government says the reforms will bring new investment in the vast and antiquated agriculture produce markets.
Rana ordered the granting of bail to Ravi, subject to furnishing two sureties of 100,000 Indian rupees ($1,379.96) each.