Under the federal system, generally, there are two sets of government i.e., national and state. Powers are divided between the two. For example in India, there are three lists – Union list, State list, and Concurrent list. The central or national government makes laws on the subjects in the Union List. These are subjects of national importance such as defense, foreign affairs and currency.

The state governments enact laws on the subjects included in the state list. These subjects are of state and local importance such as police, trade, agriculture and irrigation. Both the governments can enact laws on the subjects included in the concurrent list which includes subjects of common interest. These are education, forest, trade unions, and marriage etc.

On the other hand, under the unitary system, there is only one level of government at the national level. There are no provincial or state governments as we have in India. There is, therefore, no division of powers. The units or provincial government, if any, are subordinate to the central government or national government as in England. The central or national government has all the powers.