Let's go back to the time, when all this started that is the time when Dr. Ambedkar suggested it though the constitution I suppose. At that time caste being a major differentiator (it might be so in some areas even today) it was very important to give these socially deprived people opportunities to better themselves and raise their level to come neck to neck with upper caste ones. But, how long opportunities should be given and is today it is relevant to discriminate based on caste?
Dr. Ambedkar himself has proposed this reservation only for a limited period and if I remember correctly this limited period was something like 7 years. Now, how then this reservation continued? The answer is probably very simple, the great caste politics which has started with the independence itself.
Let's see whether the reservation helps. To be honest with my observation reservation helps to the individuals in the reservation quota while it does not help the society. One of the reasons why reservation makes a difference is that in country like India where there are so less quality institutions and such huge talent pool, if you are above some cadre only thing you need is to get noticed and that's what happens when you are quality institution. So, if Mr. A is more intelligent and hardworking than mr. B but due to reservation Mr. B could go to some great Institute like IIT while Mr. A had to settle on normal engineering college then at least for 10 years Mr. B or even for whole life will be at much better position than Mr. B, because of getting very good first opportunity than Mr. A. On the other hand all the companies, government etc lose simple because they have a less capable person for the job than they can have because it is easy to trusts an institution than an individual. I am sure people who have gine through the struggle of engineering, medical and management admissions will see the point I am trying to make.
Now, if reservation helps people in those category, why shouldn't it be done. First at foremost because we as a society and nation is losing because of it, second it is shaking the faith of younger generation in India. What we are doing through reservation is going to create a chain of new problems, bulk of which already exist. This rediff article to some extent explains different problems coming out of it.
Also more importantly, while you can have reservation for good degree and higher education for getting good primary and secondary education you need to pay thousands of rupees of donation and thousands of rupees fees, how ridiculous is that? So basically the people who are suffering are the poor people and it has nothing to do with the caste.
"Then, would the Indian government have played games with reservations in the
complex world of jobs and educational institutions? No - it would have been
forced to invest in good quality primary and secondary education for the
poor and nipped the rhetorical use of reservations in the bud."
This is extract from a mumbai mirror article and something like gives the more sound solution than a myopic fix like reservation quotas. The article is really about something else but related to this issue perfectly.
In the end also do read this post. It gives a different way of looking at the whole issue.