Hi Parag,

I reported similar bug (# 320) in May, 2008 where it is concluded that Emacs
is not selecting the proper font for Indic script, for which I've applied the
following temporary workaround for Devanagari script rendering to force the
use of "Lohit Hindi" font.

,---- M-x my-setup-devanagari-rendering
| (defun my-setup-devanagari-rendering()
|   "Setup devanagari rendering"
|   (interactive)
|   (set-fontset-font "fontset-default"
| 					(cons (decode-char 'ucs ?\x0900)
| 						  (decode-char 'ucs ?\x097f))
| 					"Lohit Hindi-12"))
`----

But that problem also went away in June or July, 2008, IIRC. So, that
workaround is not needed anymore. Following is the link to the screenshot of
the HELLO file rendered in "GNU Emacs 23.0.60.1 (x86_64-pc-linux-gnu, X
toolkit, Xaw3d scroll bars) of 2008-11-16 on chateau":

http://flickr.com/photos/wahjava/3043187881/

What I think, the problem at your end will be is lack of m17n support in
Emacs. Following is the './configure' command line of my Emacs build:

,----
| ./configure '--prefix=/usr' '--host=x86_64-pc-linux-gnu'
| '--mandir=/usr/share/man' '--infodir=/usr/share/info' '--datadir=/usr/share'
| '--sysconfdir=/etc' '--localstatedir=/var/lib' '--program-suffix=-emacs-23'
| '--infodir=/usr/share/info/emacs-23' '--with-sound' '--with-x'
| '--with-toolkit-scroll-bars' '--with-gif' '--with-jpeg' '--with-png'
| '--with-rsvg' '--with-tiff' '--with-xpm' '--with-freetype' '--with-xft'
| '--with-libotf' '--with-m17n-flt' '--with-x-toolkit=athena' '--without-hesiod'
| '--without-kerberos' '--without-kerberos5' '--with-gpm' '--with-dbus'
| '--libdir=/usr/lib64' '--build=x86_64-pc-linux-gnu'
| 'build_alias=x86_64-pc-linux-gnu' 'host_alias=x86_64-pc-linux-gnu' 'CFLAGS=-O2
| -pipe -mtune=nocona -march=nocona -ggdb' 'LDFLAGS=-Wl,--hash-style,both' 
`----

To figure out which font is used to render a particular character, move cursor
to the character and do "C-u C-x =" as pointed to me by Kenichi Handa.

HTH
-- 
Ashish Shukla