<P> For matters not directly dealt with in the constitution, the federal government retains residual powers; however, conflict between the two levels of government, relating to which level has legislative jurisdiction over various matters, has been a longstanding and evolving issue . Areas of contest include legislation with respect to regulation of the economy, taxation, and natural resources . </P> <P> The Government of India (referred to as the Union Government) was established by the Constitution of India, and is the governing authority of a federal union of 29 states and 7 union territories . </P> <P> The government of India is based on a 3 tiered system, in which the Constitution of India delineates the subjects on which each tier of government has executive powers . The Constitution originally provided for a two - tier system of government, the Union Government (also known as the Central Government), representing the Union of India, and the State governments . Later, a third tier was added in the form of Panchayats and Municipalities . In the current arrangement, The Seventh Schedule of the Indian Constitution delimits the subjects of each level of governmental jurisdiction, dividing them into three lists: </P> <Ul> <Li> Union List includes subjects of national importance such as defence of the country, foreign affairs, banking, communications and currency . The Union Government alone can make laws relating to the subjects mentioned in the Union List . </Li> <Li> State List contains subjects of State and local importance such as police, trade, commerce, agriculture and irrigation . The State Governments alone can make laws relating to the subjects mentioned in the State List . </Li> <Li> Concurrent List includes subjects of common interest to both the Union Government as well as the State Governments, such as education, forest, trade unions, marriage, adoption and succession . Both the Union as well as the State Governments can make laws on the subjects mentioned in this list . If their laws conflict with each other, the law made by the Union Government will prevail . </Li> </Ul>

Where did the idea of federalism come from