Some truth in this, but as the Catalan regional government was determined to go ahead with an unconstitutional referendum anyway, the national government had at least 3 options;
1) allow the referendum to go ahead and agree to meet with the Catalan authorities to agree a way forward afterwards.
2) allow the referendum to go ahead but, havimg already seen it ruled unconstitutional by the Spanish courts, resolve to ignore the results.
3) Send in the Guardia Civil (a hated remnant of Franco's old paramilitary police), close down polling stations, arrest Catalan officials, and assault protesters in full view of the world's press.
Seems to me Rajoy's government chose the worst of those options.
As we all know, such a referendum is not allowed under the terms of the Spanish Constitution agreed upon in 1978. Several things need to happen before there is social and economic collapse. The Spanish constitution needs to be revisited and revised to allow the flexibility for such events. The Government can stipulate a 75% majority is required for whatever the referendum is about. Secondly, the left of centre parties need to get their heads together to get rid of Rajoy and the PP, devise a coalition that is above the selfish interests of each one, and even invite pro Catalan independistas into such a ruling Government. Then the healing process can begin.