Do I need to waste one full year if I failed in one subject or can I reappear for that single paper and continue my second year immediately?

You should try to re-appear in this paper as per the provisions of the college.

Now a days, most courses have the facility of ATKT which means allowed to keep the term. Thus, you can continue pursuing next year and reappear to clear the back log subject. Please check the rules as applicable in your college.