The enemies of Maharashtra, seeing it left practically leaderless by the death of Nanasaheb and expecting the Maratha Confederacy to collapse under the heavy blow it had to face at Panipat, rose and beset her on all sides. Haidar found the opportunity to usurp the Government of Mysore from the hands of his Hindu master and sovereign and to invade the Maratha territories from the south. The Nizam at Hyderabad had made feverish preparations to avenge his defeat at Udgir. The English strove to snatch as much as they could. Not only the Muhammadans in the North, but even the Rajputs and the Jats and several other principalities revolted against the Marathas each trying to feather their own nest as best as they could. To make the matter yet worse, the treacherous ambition of Raghunath Rao threatened to usher in a Civil war and divide the Maratha camp into hostile factions, precisely when their nation was likely to be overwhelmed by their foes and the cause of Hindu Independence it represented, fall with its fortunes.
The enormous responsibility of leading the realm under such exceptional difficulties fell on Madhao Rao, the second son of balaji, who was them but a youth of 17. But fortunately for his nation he was endowed with such extraordinary abilities and personal magnetism and was so devoted to the great mission of Hindu-pad-padshahi for which his fathers had bled, that under his guidance, his nation tided well over the difficulties and held the position as the leading political power of India against all those who challenged it.
First, the Nizam tried his luck. Fancying the Marathas were dead as a power, he aimed to advance straight towards Poona. To flout their claim as the defenders of the Hindu Faith, he even insulted and destroyed the Hindu temples at Tonk.+++(5)+++ But he was bitterly disappointed when he found that the Marathas rushed from all quarters to defend their capital and faced him, 80,000 strong. He suffered a defeat at Urali and had to fall back. But as Raghunath Rao was mean-minded enough to begin his intrigues and divided the Maratha people against his own nephew, the young Madhao Rao, the Nizam once more came out with a powerful army to crush the Marathas while they were yet divided. Bhonsle and some other Sardars had actually gone over to his side.+++(5)+++ But, as often happened in the Maratha history, the denationalised and selfish tendencies, which broke from time to time the political solidarity of their people, were sooner or later counterbalanced and even corrected by the instinctive national impulse that, in spite of all egoistic aberrations, remained long the chief determining factor in their character. The Maratha Sardars who, owing to the bitterness engendered by the civil war, had joined the Nizam against the Peshwa, deserted their unnatural ally and at a very critical moment came over to the Maratha camp. The Nizam was left in the lurch. A great battle was fought at Rakshas Bhuvan in 1763, in which once again the united power of the Marathas won a splendid victory over the Moslems. The Diwan of the Nizam lay slain. Not less than 22 of his Sardars were wounded and captured, his guns and all military stores falling in the hands of the Marathas. Humaliated and humbled, the Nizam, who came out to recover all the had lost at Udgir and had the audacity to claim the right of nominating the Karbhari at Poona, had to hand over to the Marathas, a territory yielding 82 lakhs of rupees for being allowed to go back. This was the first battle in which the young Peshwa fought and distinguished himself so splendidly that his people instinctively recognised in him a leader, fit to guide their nation and lead it against all odds.
Having thus convinced the Nizam that the Hindu strength remained unchallengeably superior in spite of Panipat, Madhao Rao proceeded to teach the same lesson to that adventurous soldier who, taking advantage of the Panipat campaign, had founded a new Moslem State at Mysore on the ruins of the old Hindu principality and invaded the Maratha territories upto the Krishna river. In 1764, Madhao Rao marched against Haidar. Dharwar was re-occupied by the Marathas and Ghorpade, Vinchurkar, Patwardhan and other Generals pressed Haidar and hemmed him in all sides. A clever general and a tough soldier though he was, Haidar soon found it impossible to hold out long against his foes after a tenacious fight at Rattihalli. At last he tried to effect a clever retreat, but was forestalled by Madhao Rao on his way to Bednur. A battle was forced upon him with disastrous results to the Moslem forces. Madhao Rao personally led the charge with such a vigour that Haidar’s army was thoroughly routed. Even the most efficient troops trained by the French that Haidar possessed got badly beaten and thousands of horses and camels and field artillery fell in the hands of the victorious Marathas. All further opposition was useless. Haidar sued for peace, left the Marathas masters of all they had conquered and paid 22 lakhs of rupees as the arrears of this tribute and the Chowthai.
Madhao Rao, left to himself, would not have allowed Haider to escape even on these terms. But the vile greed of Raghunath Rao proved a greater curse to the Maratha arms than a Haidar or a Nazibkhan. He, more than once, rose in open revolt against the young Peshwa, just when he was carrying on victorious campaigns against the foes of the Hindu power.+++(5)+++ Nothing could quench Raghba’s thirst for power and the power he was the most incapable of all men to wield. Left free, he retuned to his treacherous designs of allying himself with the non-Hindu states against his own nephew. Whenever defeated and captured and imprisoned he, like so many other sickly sentimentalists, refused to take food and threatened to die of self-imposed starvation. The fate of such a troublesome claimant to a Mogul throne would have been speedily and easily determined by a small drop of poison or a sharp little dagger covered by smiles or even the tears of the ruling chief. But the young Brahaman prince was nobility and piety personified. He even went so far as to write to his uncle on a proposal of partitioning the kingdom being advanced by him in terms of utter surrender. ‘Uncle,’ wrote Madhao Rao, “You talk of partitioning this realm. But think who is the master of this mighty kingdom. Is it a private and personal property? Thousands have worked for it to render it so great, so glorious. The power of state must ever remain concentrated in one guiding hand. But how can this kingdom continue to maintain its greatness and strength when it gets divided and parceled out as personal effects are? No, no; far better for me to efface myself altogether and leave you the sole and uncontested leader of this commonwealth than consent to its division and be a party to its weakness. I will rather resign all my claim to leadership and enlist myself as a common soldier in your ranks, picking up whatever morsels you throw out to me, than hand down my name to further generations as that of one who scarified the Empire of Maharashtra to his personal greed.” - (Madhavrao Charittar- Sehstrabudhey) +++(5)+++
But the Marathas as a nation could never have tolerated a man so fickle- minded and so incapable as Raghoba, even if he had assumed the leadership of Maharashtra, while the brave, the just and the most virtuous of the Peshwa yet lived.