I a website which is ranking on top 5 positions for some keywords; however, when I check the impressions from Google webmaster for the same keywords it is very very very less. Hence, I wanted to understand even if I am ranking on 1 position by impression share should be the same as the local search volume. Please help me its urgent.
It is because of the so called "filter bubble". Even though for query "x" there might be 1000 searches, it is possible that it only ranks as number 1 for a specific group of people, that are known to be interested in subject x (as deemed by search history).
So for lets say 50% of those searches your website could come up as number 1, but for the other 50% it could be in 2nd page or even further.
In other words: if your web-site ranks as no1 when YOU search for it using that query, it doesnt neccesarilly means that it comes up as no1 for anyone else.
In addition to that, it may take some time for informaion in webmaster tools to get up to date, it is not real time.
Sadly Google's Webmaster Tools should not be trusted at all - Many companies do not even look at webmaster tools for such reports and use paid subscriptions to actually monitor things a hell of a lot better than webmaster tools does.
Don't trust anything you read on their, just use it as a estimate and if you see something which is unlikely then its simply wrong.