Hi Ajit -
Someone else asked a similar question last week. You can read the conversation here:
You are correct in that NT AUTHORITY\NetworkService won't have permissions to "go out on your network" and do things like get into shared folders (in order to connect to file-based data sources) , connect to other server-based data sources, etc.). A domain-user login also must be used if you're thinking of relying on SQL Server impersonation.
I hope this helps!