This is strictly my opinion on the subject, and since it is a tricky subject I do not want to suggest a solution.
Reservations by nature are "anti-democracy". How can you differentiate people based on their caste/sect/religion and call it a democracy? Democracy means freedom!!
Anyone who has more votes wins, similarly anyone who has more merit should win! If someone has merit but does not have the means to exhibit it, he/she should be given a platform to show it.
The government should concentrate on creating a social, financial and political infrastructure to facilitate equal opportunities.
E.g. If a person is willing to participate in civil services, do not give him a reserved seat. Instead give him means to get coaching to prepare for the exams, provide him facilities to gain more knowledge on his subject to improve himself. Back this up by financial aid/subsidy/loans where required. If this person has it in him/her, will get through in the selection process, if not maybe is better for some other job.
One argument by these groups demanding reservation is "we were oppressed by higher casts for centuries".... agreed....the Indian class system is a mis-interpreted concept used to exploit poor! But does that mean we should go back to old days? Should kshyatriyas start training themselves again with weapons and use it?
Give reservations, but then ask the person to walk with a broom tied to the back, so that the road is not made impure for a brahmin to pass!!
