Modi's magic taking time to work on capex cycle: Here's why

At the same time, the June quarter has seen the least number of new projects coming up, he says.

"We are not seeing animal spirits reviving and people saying we will make new investments," he said in an interview to CNBC-TV18 earlier today.

This does not come as a surprise, says Vyas, for two reasons. One, there is so much stock of investments on hands that making new investments seems illogical. Two, and more importantly, there is not enough confidence among businessmen that the economy is growing fast enough to generate demand for new investments.

RBI governor Raghuram Rajan on Thursday had said there were signs of the economy reviving and capital investments picking up.

"There is a continuing need, which the government is trying to address of putting some of the stalled projects back on track," he said.

But lack of government clearances alone is not to blame for the stalled projects, a note by broking firm UBS says.

According to UBS, hope that hope that regulatory clearances for "stalled" projects will kick-start the capex cycle is misplaced.

"Our caseby-case analysis of 540 projects indicates that the hope seems misplaced," says the UBS note.

"Three-fourths of the list comprises projects that appear either unworkable, unviable, constrained by promoter funding, or already substantially completed. Of the remaining 25 percent, there is a smaller subset where clearances would translate to order inflows and incremental capex," the note says.

Vyas too mentions that within stalled projects, the share of abandoned projects has actually increased.

"When companies are saying there is stalling of projects, they are actually abandoning them," says Vyas.

The stock market is still betting that a pick up in corporate investments will give a leg up to the economy and even start reflecting in corporate earnings from the December quarter onwards.

Saurabh Mukherjea of Ambit Capital feels the market's optimism around capex recovery is overblown. That is because while the government has begun to loosen its purse strings on project spending, the results will be seen earliest in the next fiscal.

"What is happening is the government is placing more orders, so whether it is roads, transmission and distribution (T&D), railways, it is very clear that order flow activity in these three sectors has picked up very materially," Mukherjea said in an interview to CNBC-TV18.

But there is still a big question mark on execution, he says, adding that the vast majority of the execution related to these order flows will happen in FY17.

"So, as a driver of either economic growth or earnings growth in the current fiscal, the pick-up in infra orders is helpful but not really a big driver of earnings growth or economic growth in the current fiscal. It is more a FY17 event," he says.

And there is the task of the projects being executed well.

"Even when we look forward to FY17, one still has to wait and watch to see what is the pace of order execution," Mukherjea says.

Vinayak Chatterjee of Feedback Infra shares Mukherjea's view that execution of the projects will be as important, or even more, than the government's willingness to spend.

"All those projects, engineering procurement and construction (EPC) in highways, ports, inland water, irrigation, transmission and distribution, all these projects really need to be pushed now," he told CNBC-TV18, adding, "..not so much financially but in terms of project implementation where the ministry is concerned."

Chatterjee goes as far to say that the pace of implementation of the projects is "the biggest salvation to a pick up in the economy."