Accusing the government of "unleashing a new political idiom" against those fighting corruption, Jaitley said "political spokesmen are being used literally as hitmen."
"Is that the level to which you have brought the level of the political discourse? Smugness, which has become a character of this government, arrogance, which has become a character of this government - is not the way to fight corruption," he said.
Jaitley said it was the government's advisors and agencies which let it down. "Your advisors let you down. Your agencies let you down... You are now in a trap," he said.
The Prime Minister, Jaitley said, was trying to build a thesis that Hazare's protest was some sort of a confrontation between Parliament and civil society but the Opposition rejects it.
"Text of your statement is that...there is a confrontation between Parliament and civil society. We are refusing to bite this bit. This is not a confrontation between civil society and Parliament of India. We refuse to accept this agenda," he said.
Jaitley said the Prime Minister' statement has left him wondering "who runs and who rules the country" and added that the statement that it was Delhi Police, which took decisions like arresting Hazare, gives an impression that the political authority of the country was hiding behind some men in uniform.
"It is time for the Prime Minister and the political leadership of India to really stand up and take bold decision.
He must go to root of the issue as to why such a loss of faith and confidence has taken place in his government," he said.