Merit. Everything to be based on merit. Easier said than done I'll say. I'd like to make a statement starting with an example.
I witnessed a very unexpected admission process to a course that's unique to the city Pune, named MCS (Masters in Computer Science). I'm speaking about the academic year 2000 - 2001. Doing this course from any college beyond certain premier colleges was not of any major importance, since all that mattered was placement in the software industry at the end of the course. Software companies did not bother to target colleges beyond the set of premier ones. Number of seats for that course (MCS) per college during that academic year: 40. Number of premier colleges offering MCS in Pune: 3. Total number of seats that the "cream" eyed: 40 * 3 = 120.
Reservations for backward categories, all put together: 50%. The number hit 50% (earlier used to be 48%) because 2% reservation was added for a quota named SBC (Specially Backward Classes). And that particular academic year, an interesting reservation was added. Reservation for girl students. Percentage: 50% of remaining seats after the reservations for backward classes was applied (25% overall). Which meant that male students belonging to OPEN category, had 10 seats available per premier institute, 30 in all. Total number of such male candidates: Well over 1000.
The government came up with this "reservation for girl students" for the engineering and related branch (that covered the B.E. degree and courses like B.Sc, BCS [Bachelors in Computer Science], MCS [Masters in Computer Science]). The reason the goverment gave at that time was that they wanted to encourage girl students to take up engineering courses since the observation was that hardly any girl students were taking up engineering courses (beyond Computer Science). There was such a huge protest against this, that the government was forced to drop this rule after 2 academic batches "suffering" due to it.
While the government had intentions that were good enough, the way they implemented them were certainly not correct. In this case, when we speak of reservations in premier institutes, a vast majority of us would be against reservation system. And some of those from this vast majority would belong to the backward caste as well. What distinguishes those who take any stand then? Their caste? Their thinking? Their ideals? You might end up choosing at least one of the above. But it is not that. It is how successful you are at "this instant" in time. If you are doing pretty well at this point in time, you have all the options to take either side. Ever wondered what happens to those who do not even come close to being asked this question? Who never got that opportunity?
I get extremely weird remarks from well-to-do people about beggars seen at signals. One such remark is "Why do these people beg? They should rather seek work somewhere and make a living". Do not take a potshot at the above statement. I have used it as a metaphor, let me make it very clear.
It makes absolute sense to have the reservation system in place. Being from the open category, I feel no hesitation in saying this. People see a decision being made and make statements for or against it. Look at what is the bigger problem. Its the population explosion that has lead to all this, and will lead to further issues over time in countries like India. You have billions of people to feed, to educate, you have infrastructure to educate only thousands, how the hell is the system going to survive in the first place? And those are ultimately in the race for getting educated, face the problems majorly owing to money. But the solution is not to give scholarships to those who are poor. Those here on this thread should do statistical analysis of who is poor. The majority of them happen to be backward castes. The backward castes have their rich brethren too, but limited. They can never be compared in ratio to the rich people from open category. Till the ratio comes to a somewhat comparable level, there better be reservation. You'll often find the politicians in India exploiting the time period at which such issues are raised. I won't consider that here though.
I have an extremist stand for countries like India. There is a genealogy project going on in some university on this Earth (most probably in Europe or US). All Indians should submit their blood samples to that project, and only those with the better* gene should be allowed to live. All others should be put to death (I personally dont mind if it includes myself given the fact that I am making this statement).
* better gene: a gene pattern that would have maximum positives. In other words, least negatives. That way, those contributing to gene pool degradation will be eliminated.