Bailey admitted the loss was deflating but insisted his team were capable of picking themselves up in time for the third clash in Mohali on Saturday.
At the halfway mark, everything pointed to Australia taking a 2-0 lead in the best-of-seven series.
Every member of Australia's top five passed 50, the first such instance in one day international history, as the score ballooned to their equal sixth-highest international total.
To that point it was also the highest score at the Sawai Mansingh Stadium.
What happened next was something Australian cricket fans are becoming increasingly familiar with, having now conceded the four highest one-day chases of all time.
The same favourable conditions which eased Aaron Finch, Shane Watson and Glenn Maxwell past 50 soon turned against the Australians.
And India pounced, blazing a 176-run opening stand between Dhawan and Sharma.
That was to be outdone by Sharma and Kohli, who piled on 186 at nearly 11 runs an over to close out the game in devastating fashion.
The tourists rued a missed opportunity to remove Dhawan when he was on just 18 - with wicketkeeper Brad Haddin grassing the chance.
A leading edge flew so high Haddin had enough time to reach square leg to field it - but the ball bounced out of his gloves.
It proved costly, with Dhawan making the Australians pay an extra 77 runs after Haddin's error.
The Australian vice-captain appeared to have redeemed himself with a brilliant stumping with Dhawan on 42, quickly whipping the bails off after Xavier Doherty (0-70) sent a faster one wide outside off stump.
Replays showed the decision could not have been closer and after three minutes of deliberation the third umpire ruled Dhawan not out.
But by then, the tide had turned and the momentum was firmly with India.
Not even Dhawan's dismissal to James Faulkner (1-60) could stem the tide, with Virat Kohli joining the onslaught with a ruthless 52-ball century that included seven sixes - one so large it nearly left the ground.
Kohli's was the fastest ODI century by an Indian, and comfortably the fastest scored against Australia.
Between both sides a remarkable 23 sixes and 75 boundaries were hit on the day.
- AAP
