Shahu, on the eve of his death in 1749, left a deed attesting the Peshwa as the guardian of the new Raja in the post-Shahu period. Shahu by this treaty was required to protect the high-esteem,the splendor and the elegance of the blue-blood of Shivaji, perpetuated by the descendants of Tara Bai. He should also recognize the independence of the state of Kolhapur and be aware of the existing rights of the Jagirdars. Together with these Jagirdars , he was supposed to exercise a concerted effort for aggrandizing Hindu authority and for the security of not only the Hindu temples, the peasants of the soil, and whatever was holy and useful.
The new Peshwa soon, found himself in dire straits being shaken by the united antipathy of Tara Bai and Damaji Gawaikwar, who threw the Raja into confinement, to abort the Peshwas rise to power. But the dexterous Peshwa quelled his harmful haters. The Raja could taste no power, whereas the Peshwa became the actual leader of the Maratha Confederacy.
Peshwa Balaji introduced changes in the structure of military-administration , that had prevailed almost as the same since the days of Shivaji. He imported Western warfare techniques through the non-Maratha mercenaries he recruited to upgrade the military skills.The army losing the uniqueness of a national character, got deprived of the essential discipline factor.
The second blunder was the abandonment of his father's ideal of "Hindu-Pad-Padshahi" or Hindu kingdom. The indiscriminate injury caused to the Muslim as well as Hindu states , estranged them from the previously friendly Rajputs and other Hindu Political Houses. In March 1757, they forcibly extracted taxes from most of the principalities south of Krishna. The Nawab of Arcot was compelled to give a word to the delivery of about four and a half lakhs rupees as "Chauth". The Marathas also conquered Bednore and the Hindu seat of Mysore. They helped the English generals Clive and Watson to suppress the sea-captain Angria. It was Hyder Ali of Mysore, the developing pillar of Mysore , who restricted the movement of the Marathas. He resorted to the assistance provided by the shrewd Frenchman Bussy and the Nizam of Hyderabad. The Nizam's army trained in utilizing improved French warfare techniques, outsmarted the Maratha Confederacy.The aftermarth was disappointing for the Marathas. They had to part away with Bijapur, nearly the entire Aurangabad, portion of Bidar , and the famous fortresses, like that of Daulatabad. The plea for a Hindu Nationalism perished halfway.The Marathas could have mingled with the indigenous powers to banish the most destructive factor, the British and save the country from centuries of colonization.But they could hardly imagine the dark future.
The animosity with the Rajputs resulted into the formation of a Maratha -Jat friendship and domination in the Doab in 1756.They even did not spare Delhi, deposed the Najib-ud -daula, the main agent of Ahmad Shah Abdali, the Afghan invader, and installed the docile Imad on the throne in 1757. Maratha chiefs, Raghunath Rao and Malhar Rao tried to incorporate Punjab from Timur, Abdali's son. They annexed Sirhind and Lahore in 1758. And before retiring from the sites, assigned the local noble , Adina Beg Khan as the Viceroy, in lieu of an assurance of a payment of seventy- five lacs rupees .
The Punjab territory fell into acute anarchy after the death of Adina Beg Khan in October, 1758. This precipitated tension in the Marathas. And Ahmad Shah Abdali , keenly looking for a loop, targeted Punjab and got it.
Abdali worsened the hard times by inviting the Ruhelas and the Nawab of Oudh , harassed by the Marathas.While neither, the Rajputs nor the Sikhs, in Punjab,sided with the lonely Marathas.They were left wretched by Abdali in the deadly battle of Berari Ghat(December 1759-January 1760). All efforts of Sadashiv Rao Bhao, to deal with the northern tangles, were in vain. He departed from Delhi, and reached Panipat on the 29th October,1760.
A few minor skirmishes continue to haunt the Marathas, which drained them off , vitality and food provisions. This left the soldiers almost starved and fatigued. The irony of the situation was that these weary soldiers had to prepare for war in the morning of 14th January ,1761, on the historic plains of Panipat. The Abdalis were a well-built combination of the troops of his "wazir" , Shah Wali Khan, Najib , Shuja and the Ruhelas. Bhao was the director of martial tactics for the Marathas. They were desperate to eradicate the enemies, but disaster of defeat befell them. And the ailing Peshwa, died with a mental wreck on June,1761.
The third Battle of Panipat crushed the backbone of the Maratha Confederacy to dust. It was the vacuity of moral strength as well as a bitter reality of diminished significance which loomed large in the massacared Maratha Confederacy.