I got the solution. Magento stores the password in md5 hash format. But it concatenate the salt value with the password then convert it into md5 hash format preceded with the : and salt value.
md5($salt.$password).":".$salt
Here is the solution
$customer =Mage::getModel('customer/customer')
->setWebsiteId(Mage::app()->getStore()
->getWebsiteId())
->loadByEmail($email);
$hash = $customer->getData('password_hash');
$hashPassword = explode(':', $hash);
$firstPart = $hashPassword[0];
$salt = $hashPassword[1];
$current_password=md5($salt.$current_password);
if($current_password!=$firstPart){
// do your stuff
}