Mixed Merge in R - Subscript solution?

Question

Note: I changed the example from when I first posted. My first example was too simplified to capture the real problem.

I have two data frames

Answer 1

NOTE: Check the 5th comment on the answer above. Solution should be

s1$index <- with(s1,ave(value1,state,FUN=seq_along))
s2$index <- with(s2,ave(value2,state,FUN=seq_along))

Tested and working.