Our Prime Minister and our Finance Minister were not seeing eye to eye for a long time. PC believed in ostrich theory. (If you believe that problem is not there, it will disappear.) I agree that cabinet should not jump the gun and control what messages it tries to send. There were some merits to his approach, after all the rumor of collapse of economy/currency/bank is often sufficient to make them fail.
However by not acknowledging that there is a recession and India is being effected by it, the only thing he was achieving was losing the credibility. Also people were starting to question if he was competent enough to fully understand the gravity of the situation.
In India removal of a Finance Minister who has a long association with that post is politically sensitive. However Manmohan Singh, with a stroke of genius used this Mumbai Blasts to politically reassigned him and in effect distance him from this post. I hope PC is not able to cause any more damage.