At the same time, the Maratha empire started transforming into a confederacy, in which individual chiefs—such as the Holkars, the Scindias and the Bhonsles of Nagpur kingdom—became more powerful.

Balaji Bajirao's administration worked with his cousin Sadashivrao Bhau, introducing new legislative and financial systems in the state.

Nanasaheb built canals, bridges, temples and lodges for travellers in the capital city of Pune and in other parts of the Maratha Empire.

Along with that he also weakened the Afghan control over Punjab, stopped their repeated invasions on the imperial capital of Delhi, subdued the Rajputs and Rohillas and neutralized the state of Oudh.

After Bajirao's death in April 1740, Chhatrapati Shahu appointed 19-year old Balaji as the Peshwa in August 1740, despite opposition from other chiefs such as Raghoji I Bhonsle.

[citation needed] In early years of Balaji Rao's tenure, Raghoji I Bhonsle helped extend Maratha influence in South and East India.

However, Shahu had forgiven the Dabhades and allowed them to retain their jagirs and titles on the condition that they would remit half of the revenues collected from Gujarat to his treasury.

Umabai's minor son Yashwant Rao was made the titular Senapati, while she held the actual executive power in Maratha territories of Gujarat.

However, after Shahu's death Peshwa Balaji Rao faced an empty treasury and pressurized the Dabhades to share Gujarat revenues as per the agreement.

[7] Meanwhile, on hearing about the rebellion, Balaji Rao left the Mughal frontier, and quickly advanced towards Satara, covering 400 miles in 13 days.

Gaekwad was compelled to declare ceasefire and meet Balaji Rao to discuss the terms of a peace treaty.

Damaji refused to sign an agreement, stating that he was only a subordinate, and asked Balaji Rao to consult Umabai.

On 30 April, Balaji Rao launched a surprise evening attack, and Damaji's camp surrendered without resistance.

Balaji Rao then surrounded the Satara fort, and asked Tarabai to release Chhatrapati Rajaram II, whose physical and mental condition had deteriorated considerably.

Tarabai refused, and Balaji Rao left for Pune, since a siege of the well-provisioned and strong Satara fort would not be easy.

Damaji kept refusing, and on 19 July 1751, Balaji Rao placed him and his dewan Ramchandra Baswant in strict confinement.

Meanwhile, Balaji Rao received a setback when his general Shankarji Keshav Phadke was defeated at the siege of Parner.

[7]In 1751, Balaji Rao had invaded the territories of Nizam of Hyderabad Salabat Jung, who was supported by the French Governor-General of Pondicherry Marquis de Bussy-Castelnau.

The Marathas wanted Salabat Jung's brother Ghazi ud-Din Khan to be appointed as the Nizam; as he had promised them a payment of ₹ 6,000,000 among other favours.

This forced Madho Singh to seek help from Safdar Jang's successor Shuja-ud-Daula as well as the Afghan king Ahmad Shah Durrani (Abdali).

Balaji's younger brother Raghunath Rao wanted a share of revenues from the prosperous Bharatpur State.

Balaji Rao dispatched Scindia and Holkar chiefs to prevent Nasir Jung from reaching Delhi, and thus, saved Safdar Jang.

[3] Starting in 1748, the Afghan king Ahmad Shah Durrani (Abdali) launched several invasions of India, forcing the Mughals to seek Maratha help.

[11] During this period, warriors called as "Bargis", perpetrated atrocities against the local population,[11] against Hindu Bengalis Muslims and Biharis.

[11] As reported in Burdwan Kingdom's and European sources, the Bargis are said to have plundered villages,[12] and Jan Kersseboom, chief of the Dutch East India Company factory in Bengal, estimated that perhaps 400,000 Hindu civilians in Western Bengal and Bihar were dead owing to the invasion of Bargis.

[12] According to the 18th-century Bengali text Maharashtra Purana written by Gangaram:[11] In 1751, the Marathas signed a peace treaty with the Nawab of Bengal, according to which Mir Habib (a former courtier of Alivardi Khan, who had defected to the Marathas) was made provincial governor of Orissa under nominal control of the Nawab of Bengal.

This was the high-water mark of Maratha expansion, where the boundaries of their empire extended north of the Sindhu river all the way down south to northern Kerala.

[19] The Mughal loyalist Muslim intellectuals of Delhi were alarmed at these developments, and appealed Durrani to check the rising Maratha power.

The Jat ruler Suraj Mal of Bharatpur also joined the Marathas, but later left the alliance due to a misunderstanding with Bhau.

"[24] The defeat at Panipat resulted in heavy losses for the Marathas, and was a huge setback for Peshwa Balaji Rao.