The event --Lalisom -- was a flop as some performers allegedly bluffed viewers by lip-syncing, forcing Mohanlal to make an offer to return the amount.
Though a final call on this will be made only tomorrow, the thinking is strong in the government that taking back money would be discourteous and humiliating for a major artist like Mohanlal.
An upset Sports Minister Thiruvanchur Radhakrishnan said a decision on the matter would be taken after Chief Minister Oommen Chandy returned to the state capital tomorrow.
In an e-mail to the government, Mohanlal had last evening said he was "pained" by the controversy and expressed the hope that returning the money would end the row.
"The government approached me at the last minute and asked me to perform the Lalisom show at the opening ceremony after a musical event that was earlier planned did not take off. For the past three weeks, I and my team have been working hard to bring this on the stage."
"I have no complaints against those who trivialise my weeks-long dedication and hard work which I put in for the success of the show. But I am very particular that my fans and admirers should have no suspicion about me with regards to the issue," he added.
The performance of the band, in which Mohanlal himself sang a number of songs along with some well known singers, invited wide spread criticism, not only from film and music circles, but also from the political fraternity.
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