Minister of State for Housing and Urban Affairs Hardeep Singh Puri has told Mr Kejriwal in a letter that the Metro Act does not allow the central government to put on hold the fare hike.
The AAP government has opposed the fare hike proposed from October 10. It has locked horns with the Delhi Metro Rail Corp (DMRC) over the impending second hike this year, following the recommendation of the fourth Fare Fixation Committee (FFC).
Mr Puri said setting up a fresh FFC could be considered if the Delhi government agrees to pay up over Rs 3,000 crore annually to DMRC.
The DMRC was formed in 1995 with equal equity participation of the central government and the government of National Capital Territory of Delhi.
Mr Puri's letter dated October 6 was a response to a letter from Mr Kejriwal on September 29 asking the central government to put the hike on hold.
"Your suggestion that this Ministry direct that the fare increase be kept on hold overlooks the fact the central government does not have any such authority. Tampering with the recommendations of FFC is legally untenable," Mr Puri said in his letter.
Mr Puri noted that the alternative to fare hike was to provide DMRC yearly grants-in-aid for the next five years: Rs 3,040 crore, Rs 3,616 crore, Rs 3,318 crore, Rs 3,150 crore and Rs 2,980 crore respectively.
Rebutting the Delhi government's claim that FFC had recommended that the two fare hikes should have a gap of one year, Mr Puri said Mr Kejriwal's statements vis-a-vis the FFC were both "misleading and factually incorrect".
Mr Puri said the Phase-IV of Delhi Metro was running behind schedule by two-and-a-half-years due to decisions taken by the Delhi government.
Responding to Mr Puri's letter, a Delhi government spokesman said: "Why is the Centre not putting on hold DMRC fare hike? Because it is not the khakhra of poll-bound Gujarat!!"
He added that Mr Puri's arguments meant that the people of Delhi should suffer as DMRC didn't rationalize its fares for eight long years.
Last week, Mr Kejriwal asked Delhi Transport Minister Kailash Gahlot to find a way to stop the "anti-people" fare hike.
The DMRC defended its decision by saying its input costs had gone up over the years and the increase was at par with Metro rails in other cities.
The Delhi assembly will meet on Monday to discuss the proposed hike.