UPDATE 3-Thai graft body to probe rice subsidies, adding to PM's woes amid protests
* Protesters reject snap election, want government out now
* Their main aim is to eradicate influence of ex-PM Thaksin
* PM Yingluck says protests running out of steam
* Finance minister says disruption will cut GDP growth
By Apornrath Phoonphongphiphat and Andrew R.C. Marshall
BANGKOK, Jan 16 (Reuters) - A Thai anti-corruption agency said on Thursday it would investigate a money-guzzling rice subsidy programme that has fuelled opposition to Prime Minister Yingluck Shinawatra, as protesters marched through the capital demanding she resign.
The unrest flared in November and escalated this week when demonstrators led by former opposition politician Suthep Thaugsuban occupied main intersections of the capital, Bangkok, but the number of people camping out overnight at some of the intersections appears to be dropping.
The turmoil is the latest episode in an eight-year conflict that pits Bangkok's middle class and royalist establishment against the mostly poorer, rural supporters of Yingluck and her brother, former premier Thaksin Shinawatra.
Yingluck's Puea Thai Party was helped to power in 2011 by offering to buy rice at way above the market price to help poor farmers.
Critics say the programme is riddled with corruption and - a particular gripe of the more well-heeled protesters - that it has cost taxpayers as much as 425 billion baht ($12.9 billion), although that figure would drop if the government managed to find buyers for the rice in state stockpiles.
"Those who oversaw the scheme knew there were losses but did not put a stop to it," Vicha Mahakhun, of the National Anti-Corruption Commission (NACC), told a news conference.
Yingluck is nominally head of the National Rice Committee and could therefore eventually face charges.
The intervention price made Thai grain so expensive Thailand lost its position as the world's top rice exporter, overtaken by India and Vietnam.
Thaksin's rural and working-class support has ensured he or his allies have won every election since 2001 and Puea Thai seems certain to win an early election Yingluck has called for February.
The anti-government protesters have rejected the election.
They want to suspend what they say is a fragile democracy destabilised by Thaksin, whom they accuse of nepotism and corruption. Their goal is to eradicate the political influence of his family by altering electoral arrangements, though in ways they have not spelt out, along with other political reforms.
In a separate ruling, the NACC said it had grave doubts about government-to-government deals announced by former Commerce Minister Boonsong Teriyapirome. He and other officials will now be summoned to explain themselves and the NACC will then decide whether to file formal charges.
"The government rice deals did not happen because rice was not shipped out of the country as they claimed," Vicha said.
Exporters raised the same question at the time in late 2012 and Boonsong was sacked by Yingluck in June 2013 when he failed to answer public concerns about the deals and the cost of the intervention programme.
PROTESTS LOSING MOMENTUM?
Many ministries and state agencies have closed to avoid violence, with staff working from home or back-up facilities.
The protesters are trying to paralyse ministries, marching each day from camps they have set up at the seven intersections. On Thursday they targeted revenue offices.
But along with the fewer numbers camping out overnight, attempts to block traffic along other roads have become half-hearted.
"People see that the requests of the protesters are impossible under the (law) and constitution," Yingluck told Reuters. "That's why the number of supporters is getting less."
She was speaking as she left her temporary offices at a Ministry of Defence facility in northern Bangkok, heading for a "reform forum" at a nearby air force base.
"That's the best way for Thailand, to have a dialogue," she said. "Whatever we don't agree on (and) the conflicts of the past can be solved under the reform forum."
Army spokesman Winthai Suwaree said some troops were patrolling protest areas or helping at medical tents.
The security forces have largely kept out of sight since the blockades began this week, with the government keen to avoid any confrontation.
The unrest is hurting the economy. Finance Minister Kittirat Na Ranong said it might only grow 3 percent this year rather than the forecast 4.5 percent because of disruption to manufacturing, exports, consumption and tourism.
Somchai Sajjapong, head of the Finance Ministry's fiscal policy office, said 2 trillion baht ($61 billion) of infrastructure projects would not now start in the fiscal year to September and other investment would also be delayed.
"These are two major factors for the growth forecast downgrade ... If the Feb. 2 election is not held, growth could be lower than 3 percent," he added.
Yingluck dissolved parliament in December in an attempt to end the protests and she has set the election for Feb. 2.
On Wednesday she invited protest leaders and political parties to discuss a proposal to push back election day, but her opponents stayed away. The date has been maintained.
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