"The position Congress has taken with regard to "Azadi" or autonomy to be given to Jammu and Kashmir, goes directly contrary to India's national interest", said Jaitley.
"The demand in the Kashmir Valley is to respect in letter and spirit Article 370".
Speaking at an event in Rajkote on Saturday, Chidambaram said when people in Kashmir ask for "freedom" a lot of them want greater autonomy and "I think we should seriously examine that question and consider on what areas we can give autonomy to" the state.
Addressing BJP workers at Bengaluru's HAL Airport on Sunday, the PM, on a one-day visit to Karnataka, while not naming Mr Chidambaram, criticised Congress leaders for their "insensitive" and "shameless" statement on autonomy for J&K.
Indian Prime Minister Narendra Modi on Sunday launched a scathing attack on Congress leader P Chidambaram over his advocacy for greater autonomy for Indian-held Kashmir, accusing the opposition party of "shamelessly, lending their voice for Kashmir's azadi... using language... used by the separatists in Kashmir (and)... spoken by Pakistan".
Chidambaram's response was that Modi hadn't read his comments fully, and that he was attacking a "ghost". "Those who criticise must read the whole answer and tell me which word in the answer was wrong".
Union Minister Smriti Irani too slammed the senior Congress leader over his statement on Kashmir.
Modi has said that statement of a Congress leader on Kashmir clearly shows how the party feels on surgical strikes and bravery of army.
The Congress, however, sought to distance itself from the remarks of Chidambaram on Kashmir, saying the "opinion of an individual is not necessarily the opinion of the party".
Chidambaram landed in controversy after saying that Kashmir needed autonomy.
"Congress has always believed that dialogue and discussion is the way forward for restoration of normalcy in the state, but it can only be within the framework of our Constitution".
More rights would mean a return to the pre-1952 situation when the state had a separate president, prime minister and flag and was out of the purview of the supreme court and the chief election commission, the Union finance minister added. He termed the Congress the "architect of the present mess" in the state.