There are several factors that come into play here. First of all, the raw files are 12 bit or 14 bit images. The JPEG image is an 8-bit image, and is compressed. You can control the amount of compression in the export by adjusting the quality, but the JPEG will naturally be much smaller by design. The size of the JPEG file will vary because the compression will be based on the contents of the image. In the image that you have shared, approximately 50% of the image is sidewalk with very little detail. Consequently, it will compress more efficiently. If you look at the pixel size of the JPEG compared to the raw image, you will see that the size is the same. And I don't think the size difference you are seeing is unreasonable for this particular image.
I have taken some pictures in RAW format. This is of 25.4MB size. but when i try to save it in .JPG it reduces to 4.7 MB.
That's exactly the kind of file size reduction I would expect and hope for when saving a Raw file like that to JPG.
JPG is lossy by design but is designed to only discard image data which makes little if any discernible difference (to the naked eye) to the final image. It's ideal for reducing the file size of photos.
What concerns you about the file size reduction?
When I try to blow up a picture ( a different one ) which has the same size and dimensions on the raw format... but when i do some edits on it using photoshop - multiple layers etc and try to save it as JPEG it gets saved as 2.1 MB. With that file size its getting really difficult to blow up the image on a canvas ( the clarity is lost when i blow it up ). So i am trying to find a way where i can retain the size ( / clarity ) so that i can blow up the picture on a banner or a canvas and still get a clear picture without any distortions.
It seems that you have muddied up the workflow a little bit from what you first described. If you are shooting raw images, you should work with the raw image data for as long as possible. That's where you'll get the greatest control over your image data. When you go to Photoshop, I would recommend saving the work as a PSD or TIF file. Then I would create the JPEG as a copy of that image.