Thank you AdiCohn for your comments.

I am experiencing two problems in changing the application-user to Sql-user.

1) My system is too complex having almost 350 tables and 80 or more data entry screens, 200 more report screens. It is something like an ERP system. In Sql server I can give only table level permissions. So if i want to give permission for a data entry screen, in SQL server i have to give permission for the underlying tables. In many cases, more than one table is updated in a single data entry screen, and also the same table is used in more than one entry-screens. In this case table level permission is nearly impossible. I have a user table, a screens table (with names of forms, reports etc) and a permissions table. Whenever a user is selecting a screen, I am just checking the permissions table for his user_id and the screen_id he selected. if a row is there with both these, then he is allowed to use that screen.

2) Actually this 2nd one is a problem which I found during the early days of developing this system. I haven't tried to overcome this as I am using a single User Name for SQL. The problem is like this. User1 has created a table 'Supplier' and he can pass the querry 'Select * from Supplier'. But User2 has to pass the querry "Select * from user1.Supplier". Is this a problem??