Controversy has arisen from stimulus measures declared by the Thai government to reverse the kingdom's economic slowdown, with the public relieved on future growth but economists doubting the plan's effectiveness.

A series of measures aimed at improving income and cutting tax were announced by Prime Minister Thaksin Shinawatra on Tuesday through a nationwide live broadcast.

Key points of the package included a 5 percent salary increase for civil servants, a hike for minimum daily wages, subsidy for elderly poor people, special fund for every rural village and big tax breaks for employers providing favorite treatment to workers.

Though details of the package have yet to be worked out, the pay increases are expected to require about 20 billion baht (500 million US dollars) extra fund.

Thaksin also assured the public of the prospect of this year's economic growth, saying the government would discuss with trade partners for major agriculture products exports such as rice, shrimp and longan.

"The measures will help shore up employment and economic stability," Pridiyathorn Devakula, governor of the Bank of Thailand, was quoted by Bangkok Post as saying.

He said that with oil prices unlikely to ease greatly in near future, wage hikes were appropriate to help offset the higher cost of living.

Having announced the stimulus package, the government on Wednesday floated diesel prices and stopped the subsidy of 1.36 baht (0.034 dollars) per liter diesel.

Many TV viewers also welcomed the package announced by Thaksin. According to a survey by Suan Dusit Rajabhat University, almost 47 percent of a focus group comprising 144 people said they were " rather satisfied" with the government's short-term measures to boost the economy, and some 40 percent of the viewers said they were "rather confident" that the latest package would boost economy.

Economists and private sectors, however, are less optimistic about the effectiveness of the short-term plans.

The measures aimed at increasing domestic consumption could not save the economy, said Sangsit Piriyarangsan, economist and deputy chairman of the National Social and Economic Advisory Council.

"People haven't stopped spending, but the fact is that we are short in foreign earnings," he said, noting tourism, one of the country's pillar industries, was far from recovery.

Some economists even warned the stimulus measures would threaten stability by accelerating inflation and exacerbating the current account deficit.

"Thaksin has sent out the wrong signal to the market," said Somchai Jitsuchon, a senior researcher.

Thailand's economy has slowed down under pressure of rising oil prices, long draught affecting the country's most area and sluggish tourism recovery after tsunami.

Both the Bank of Thailand and the government think-tank National Economic and Social Development Board have cut down their projections for this year's economic growth by one percentage point to 4.5-5.5 percent.

Others saw the measures as Thaksin's efforts to win the people's confidence and sustain the government's popularity.

Thaksin's popularity has dropped to a three-year low of 45.9 percent with oil prices soaring and more corruption cases exposed, according to a recent national survey result.

"The measures represent a major political gamble apparently aimed at arresting the slump in the prime minister's popularity and cushioning the impact of the government's decision to end the diesel prices subsidy," said leading local newspaper The Nation on Wednesday.

Source: Xinhua