In the end India did the unthinkable - cruising to a nine-wicket victory with 39 balls to spare, with Rohit Sharma (141*) and Virat Kohli (100*) scoring spectacular centuries to go with Shikhar Dhawan's 95.
QUICK SINGLE: The second ODI in images
Bailey changed up the bowling, set new fields and implemented every plan Australia had prepared.
But none of it was effective.
"The full ones were going over our heads, and the short ones were going over the side fence," he said.
"I don't think it mattered where they (bowled)."
Bailey admitted the loss was deflating, but insisted his team was capable of picking itself up off the canvas in time for the third clash in Mohali on Saturday.
QUICK SINGLE: Bailey: We were just outplayed
"It's deflating, absolutely," Bailey said.
"We don't have time (to worry). There's five games left.
"We've just got to jump back on (the horse). There's a lot to like still.
"That's two games in a row we've batted beautifully. We've bowled beautifully in one game.
"And it's one-all.
"I don't think there's too much consoling that needs to be done.
"New wicket, new conditions ... you bounce back. That's what you do."
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 ever 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 - and all since 2006.
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 he made a meal of it and 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 balls 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.
Perhaps an extra frame would've worked in Australia's favour.
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 innings 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 ever scored against Australia.
Between both sides a remarkable 23 sixes and 75 boundaries were hit on the day.
Earlier, Hughes and Finch again got off to a flier, while Watson foreshadowed the fireworks to come by stepping up the tempo in true Twenty20 fashion when he arrived at the crease.
Fastest ODI 100s
37 balls: Shahid Afridi Pakistan v Sri Lanka 04/10/1996
44: MV Boucher South Africa v Zimbabwe 20/09/2006
45: BC Lara West Indies v Bangladesh 09/10/1999
45: Shahid Afridi Pakistan v India 15/04/2005
48: ST Jayasuriya Sri Lanka v Pakistan 02/04/1996
50: KJ O'Brien Ireland v England 02/03/2011
52: V Kohli India v Australia 16/10/2013