Jaitley also said leader of his own party would be decided on the basis of tried, tested and proven ability.
Without naming Rahul, the Leader of Opposition in the Rajya Sabha said the Congress has not given answers at its Jaipur meet to issues such as price-rise, non-governance and corruption which have led to disenchantment among people.
"The only answer to all these problems is converting the world's largest democracy into a dynastic democracy," Jaitley said at a BJP state legal cell lawyers' conference in Bangalore, referring to Rahul Gandhi's appointment as vice president, an elevation to the No 2 position in the Congress.
"The answer (to the problems by the Congress) is let us go in for democracy that is dynastic in nature. That's the answer to every problem in the country."
"Fortunately for us, Indian public opinion is very alert. It's never given to be misguided by response of this kind".
"It's only in feudal society that inheritance gives you the right to govern. In democracy, it is proven ability that gives right to govern," he remarked.
Jaitley said as a structured political party, the BJP would throw up its leadership -- he did not say whether this meant the party's prime ministerial candidate -- who would be the best and first among the equals on the basis of proven ability.
And in a clear dig at Rahul Gandhi, he said the world's largest democracy cannot be put to risk by giving leadership to somebody whose actual position on various issues and policies are not known.
"It will be tried, tested and proven ability (that will decide on who the leader of the BJP will be). The best will become our leader at the appropriate time," Jaitley said.
Jaitley also charged the United Progressive Alliance government with making economic reforms synonymous with "oppression of people", pointing to rise in cooking gas and diesel prices and cap on subsidised LPG cylinders, among others.
Jaitley said the Central Bureau of Investigation is no longer controlled by the UPA government; it's actually controlled by the Congress party which decides on which of the cases to go soft and which of them should be "let loose".
Whenever the government is in trouble, it's either the Samajwadi Party or the Bahujan Samaj Party that bails it out, and the only reason is their leaders are in "trouble" with the CBI, he said.
Jaitley said the BJP is committed to the Lokpal Bill and will actively pursue it in the next Parliamentary session. He said the prime minister's repeated statement on "zero tolerance against corruption" is mere "template" as "maximum amount of corruption has taken place during his regime".
Referring to the January 8 incident on the Line of Control in which two Indian soldiers were killed, he said the threat from across the border (Pakistan) remains and one can't be befooled by the Indian government's "gush-gush diplomacy" that Pakistan has changed its agenda.
Jaitley said Kashmir always was part of the unfinished agenda of Pakistan and it has never reconciled to it being part of India.
On beheading and mutilation of the two soldiers, he said they are not even done during war times. "It's a war crime. The whole country felt insulted."