I had a line - $autoload['libraries'] = array('database');, in CI's autoload.php. Because of this I was getting a blank page. When I removed the 'database', option then I started getting the output.
Now my question is not how to configure the database, but how to configure CI to speak its mind. When 'database' was enabled all I got was a complete blank page. No error in php log, no error in Apache log, no error in CI log. In PHP I have set E_ALL. In my CI config I have set log_threshold to 4, i.e. all messages should be logged. What more do I need to do?