Peace was re-established in India shortly after New Year's day. Lord Hastings would stop at nothing but the absolute deposition of the Peishwa. He had long resolved to reduce Baji Rao to the condition of Napoleon at St. Helena. Accordingly, he delivered the Rajah of Satara from the thraldom of generations, and assigned to him sufficient territory for support. This done he set himself to hunt down the deposed Peishwa. For several months Baji Rao remained at large. He made a feeble stand at Ashti, but fled at the first shot, leaving his army to be defeated by General Smith. It was on this occasion that the Rajah of Satara fell into English hands. Later in the year Baji Rao was surrounded by British troops, under the command of Sir John Malcolm. No alternative was left him but to die or give up. The terms offered by Malcolm were so liberal as to excite astonishment in Europe. While the great Napoleon was condemned to spend his remaining days on a mere pittance at St. Helena, this most cowardly of Indian princes was allowed to live in luxury near Cawnpore, on a yearly grant of £80,000. His friend Trimbukji Dainglia, however, when captured, was condemned to close confinement in the fortress of Chunar.
The remains of the Holkar states were permitted to endure, nor would Hastings sanction the proposed dethronement of the family of Jaswant Rao. Holkar was merely required to seize certain territories, and to confirm the grants already made to Ameer Khan. From a sovereign principality the land was reduced to a subsidiary state under British guarantee. Otherwise the infant Mulhar, Rao Holkar, was treated as an independent prince and his administration was left in the hands of a native Durbar, aided by the British Resident. The policy of Lord Hastings, although severely criticised in England, must be pronounced a success in the light of later events. From the suppression of the Pindarees and the extinction of the Peishwa in 1818, down to the days of the great mutiny, no serious attempt was made to overthrow British suzerainty by means of an armed confederation of native states.
In some respects the administration of Lord Hastings marks a new era in the history of India. Hastings was the first Governor-General who encouraged the education of the native population. Early in his administration he denounced the maxim of his predecessors, that native ignorance would insure the security of British rule, as an utterly unworthy and futile doctrine. Accordingly, he promoted the establishment of native schools and publications.