He also termed him as a syana aadmi or a wise man, saying with an element of scholarship, he was always well-read and well-prepared on any subject that he dealt with.
While Singh is the Leader of the House in the Rajya Sabha, Jaitley is the Leader of the Opposition in the Upper House.
He said as curtains draw to a close after after 10 years of leading the government, the Prime Minister "goes out with dignity and grace".
Jaitley said Manmohan Singh is a wise man and well-prepared on any subject
"He will remain an elder statesman and a man of credibility to guide the nation. Only if he had stood up at the right time and disagreed he would have been regarded with still a greater honour," Jaitley wrote on his blog.
He said Singh became a Prime Minister on account of certain circumstances which compelled Congress President Sonia Gandhi to withdraw her name from the reckoning.
"He was literally a Prime Minister announced by Sonia ji. He had to function within that limitation."
"... When he addressed the country, he never came out as a leader. The reason for not coming out as a leader was clear. He never wanted to rock the boat. He knew that he was vested with limited power and on all major decisions he had to keep the party and its first family in good humour," Jaitley wrote.
He said Singh has two strong qualities. "Firstly, whenever you discussed a serious subject with the Prime Minister he came out as a man of scholarship. He was what we call to as a syana aadmi."
Dr. Singh's words, Mr. Jaitley said, were measured and he would reflect before making a comment. "Secondly, his personal integrity was always above board. With an element of scholarship he was always be well read and well prepared on any subject that he dealt with."
Jaitley said he had the opportunity of observing the Prime Minister from close quarters for the last 10 years.
He said in the last five years as the Leader of the Opposition, he virtually had heard his every intervention in Parliament and dissected each one of his performances.
"Unquestionably Dr. Manmohan Singh was a very good Finance Minister. He got a lot of support from his Prime Minister, P.V. Narasimha Rao, for initiating the economic reforms in 1991. For a Congress Party government which had always professed the virtues of regulation a reformist approach was creditable," the BJP leader wrote.
He said Rao has never been given the level of credit which he truly deserved. "I am sure history will reassess him."
Mr. Jaitley said he had recently suggested to the Prime Minister that he would be interested in reading his memoirs, particularly those relating to the period 1991-96.
"The footprints he left behind as a Finance Minister during this period will be remembered for a long time," he said.
When the reform process was blocked on account of decisions of the National Advisory Council or when Rahul Gandhi tore apart the papers of objectionable ordinance, the Prime Minister was perceived as a non-leader who had to accept everything without his opinion mattering significantly, he said.
"It was his inability to overrule people which affected his functioning. He did not have the last word. Had he overruled his Finance Minister on the retrospective tax law knowing fully well the consequences of a retrospective taxation, the Prime Minister would have stood out.
"If he had stood up and cancelled the coal blocks allocation once the fraud was revealed or cancelled the 2G licences himself rather than wait for the court to do it, I have no doubt that history would have recorded him very differently. It was the inability to speak up within his own party that may compel the historians to take a different view of the man," said Jaitley.