"Mani Shankar Aiyar's 'Neech' attack on Prime Minister - a deliberate casteist statement, a convenient apology, a strategic suspension. People should see through this game," Mr Jaitley tweeted.
Mr Jaitley's reaction was the first by a top BJP leader late on Thursday evening after the Congress went into damage-control mode and suspended Mr Aiyar from the primary membership of the party. The senior Congress leader has also been served a show-cause notice.
Congress vice president Rahul Gandhi had initially asked Mr Aiyar to apologise. Hours later, the party announced on Twitter that he had been suspended too.
Mani Shankar Aiyer’s ‘Neech’ -attack on Prime Minister- a deliberate casteist statement, a convenient apology, a strategic suspension. People should see through this game
— Arun Jaitley (@arunjaitley) December 7, 2017
Mr Aiyar's suspension had come after top BJP leaders including PM Modi badgered the Congress for its leader's remarks, underlying that it reflected the Congress leadership's inability to accept that someone from a humble background could "wear good clothes".
Campaigning in Surat ahead of the first phase of voting in the Gujarat assembly elections on Saturday, PM Modi said Mr Aiyar's reference to his low caste was not just an insult to him but Gujarat as well.
He also recalled the previous occasions when Congress leaders had called him names.
"You called us donkey, you called us 'gandi nali ka kida' (worm of a dirty drain), you called us 'maut ka saudagar' (merchant of death), you said I am of 'neech jaati' and 'neech'. But we will live according to our 'sanskars' (values)," PM Modi said in his election rally in his home state, according to news agency Press Trust of India.
Other top BJP leaders had followed up on the PM Modi's sharp attacks.
Mr Jaitley called Mr Aiyar's remarks a reflection of the mindset that "only one elite family" can rule this country.
Mr Aiyar had earlier on Thursday called PM Modi a "neech aadmi" (vile man) who does "dirty politics" after the Prime Minister targeted the Congress saying that parties seeking votes in BR Ambedkar's name had tried to erase his contribution to nation building the party.
"The strength of India's democracy," the finance minister said in a tweet, "will be displayed when a person of humble background politically defeats the dynasty and its representatives."