Late payments to farmers from the P

Late payments to farmers from the Pheu Thai-led government's rice-pledging scheme have already taken a bite out of the already sluggish economy, shaving 0.1 to 0.2 percentage points off growth. The magnitude of the impact could be extended to 0.5 to 0.7 percentage points if payments are delayed for one year, said Thanawat Polvichai, director of the University of the Thai Chamber of Commerce's Economic and Business Forecasting Center.
"A number of business sectors in provincial areas have felt the impact, particularly small and medium-sized enterprises (SMEs) and shops in farming communities as people become more cautious about spending," he said.
Since the 2013-14 main crop started last Oct 1, about 10 million tonnes of paddy worth 150 billion baht have been pledged to the government.
The state-owned Bank for Agriculture and Agricultural Cooperatives, which handles payments, paid 50 billion baht to farmers before funds dried up.
The caretaker government is waiting for the Council of State's official opinion as to whether it can borrow 130 billion baht to meet payments.
It plans to transfer 130 billion baht earmarked for infrastructure investment to pay farmers, who are the Pheu Thai Party's base voters.
Mr Thanawat voiced concern about farmers' debts as some must borrow to pay for fertiliser, pesticide and daily expenses.
Tanit Sorat, deputy chairman of the Federation of Thai Industries, said sales by SMEs upcountry have declined dramatically, as farmers' purchasing power has fallen from late rice payments and declining rubber prices.
If the situation persists for a long time, the spillover will be seen in other areas, he said.
"Lacklustre consumption for a second straight year is the industrial sector's greatest concern," said Mr Tanit.
He said the industrial, agricultural, export and public sectors are running out of momentum, while tourism is being hurt by the political strife