Thanks for sharing that I don't need to run a sketch for testing. This led to some movement in my efforts, as now I am monitoring serial monitor, without uploading anything.
When I launched serial monitor, after connecting to the right port, I saw the following message : (before I could give an AT command) :
ets Jan 8 2014, rst cause:4, boot mode:(3,0)
wdt reset
load 0x4010f000, len 1024, room 16
tail 0
chksum 0x42
csum 0x42
~ld
I don't get any response when I enter any of the AT commands (tried all possible baud rates)
I removed the GND->GPIO0 before connecting to my computer, as I am not uploading sketch anymore.
Blue light keeps flashing, so I am assuming reset is done
Interestingly, many a times, Arduino does not detect the USB port at all - I have to repeatedly try reconnecting the ESP to my computer, and also re-starting the Arduino program. I am running as a root, so not sure what else could be a problem there.