The Railways on Tuesday rejected the Planning Commission's proposal for setting up a rail tariff authority to fix passenger fares in a non-political manner.

"They have their own views, we persist with our views," Planning Commission Deputy Chairman Montek Singh Ahluwalia said when asked whether the panel's proposal was rejected by the Railways.

In his presentation before a meeting of the full Planning Commission chaired by Prime Minister Manmohan Singh, Ahluwalia suggested that "a Rail Tariff Regulatory Authority should be established to recommend rail tariff structure in a non-political fashion".

Although railways' minister Mamata Banerjee was not present at the meeting, a senior official of the ministry turned down the proposal saying it was not possible to allow any authority to fix passenger fares as the organisation has to discharge social obligations.

Later talking to reporters, Ahluwalia said the Railways needs lot of funds to implement the schemes envisaged in the Vision 2020, which can cannot be provided through the budgetary allocation.

The organisation needs to raise resources from internal sources by rationalising tariffs, he said, adding the Railways is providing a subsidy of Rs 19,000 crore towards passenger fares. For improvement of rail infrastructure a lot of investment is required.

"That the ministry would have to generate from their internal resources and through PPP. I think for increasing internal resources, tariff rationalisation is necessary. There is a subsidy to the tune of Rs 19,000 crore in passenger tariff. We think that is unnecessary," Ahluwalia said.