This paper examines two state-led public-private demand-side financial support programs aiming to raise hospital delivery rates in two neighbouring Indian states-Gujarat and Madhya Pradesh. The national Janani Suraksha Yojana (JSY) was complemented with a public-private partnership program Janani Sahayogi Yojana (JSaY) in Madhya Pradesh in which private obstetricians were paid to deliver poor women. A higher amount was paid for caesarean sections (CS) than for vaginal deliveries (VD). In Gujarat state, the state program Chiranjeevi Yojana (CY) paid private obstetricians a fixed amount for a block 100 deliveries irrespective of delivery mode. The two systems thus offered an opportunity to observe the influence of supplier-induced demand (SID) from opposite incentives related to delivery mode.The data from the two programs was sourced from the Departments of Health and Family Welfare, Governments of Gujarat and Madhya Pradesh, India.In JSaY program the CS rate increased from 26.6% (2007-2008) to 40.7% (2010-2011), against the background rate for CS in Madhya Pradesh, of only 4.9% (2004-2006). Meanwhile in CY program in Gujarat, the CS rate decreased to 4.3% (2010-2011) against a background CS rate of 8.1% (2004-2006).The findings from India are unique in that they not only point to a significant impact from the introduction of the financial incentives but also how disincentives have an inverse impact on the choice of delivery method.