All 329 people on board Kanishka Flight 182 from Montreal to New Delhi perished when it was blown up mid-air near the Irish coast June 23, 1985, by a bomb planted by Khalistani militants to avenge the Indian Army action at the Golden Temple in June 1984.
The families of each victim were paid upward of $75,000 in an out-of-court settlement in 1991.
But a public inquiry commission led by former Canadian chief justice John Major, which in its June report blamed various government agencies for failing to stop the bombing plot, asked the government to make additional symbolic ex-gratia payment to the families.
Confirming this, Immigration Minister Jason Kenney told IANS: "The ex-gratia payment will be made by Christmas. It has taken too long (to put closure to the tragedy) and the prime minister wants it done quickly. The government is continuing its consultations with the families about what should be an appropriate amount."
Kenney said the government would get "further inputs from the families through emails or phones" to arrive at the amount to be paid to each of them.
However, sources said there was no unanimity on the amount among the victim families during their meeting with the two ministers last week.
"Two or three of the 40-odd people who took part in the meeting wanted the amount to be as high ($10 million) as paid by Libya in the 1988 Lockerbie bombing. But Libya paid the amount because it plotted the bombing itself. So you cannot compare these two tragedies," sources said.
There were 280 Canadian citizens of Indian origin among the 329 victims.On the 25th anniversary of the bombing this June, Prime Minister Stephen Harper formally apologised to the victim families and promised to put closure to the tragedy.
The Kanishka bombing was the worst aviation tragedy till 9/11 happened.Two main suspects - Ripudaman Singh Malik and Ajaib Singh Bagri - were acquitted and only one person - Inderjit Singh Reyat - was jailed for the bombing.