Step 1: Find the flux in the coil before and during the fall:
The coil is wound on one arm of the U magnet, so it links the magnetic flux that passes along that arm.
Inside the magnet the field goes from the S pole towards the N pole. In the arm with the coil, it points down the arm from the S pole.
When the soft iron rod comes close to the two poles, it closes the gap with a low-resistance path. So the flux through the arm grows while the rod is falling.
Step 2: Apply Faraday's and Lenz's laws:
Because the flux is changing, an emf is induced in the coil, so the current is not zero.
Lenz's law says the induced current opposes the increase of flux. The flux in the arm is downward, so the induced field must be upward.
A current that gives an upward field in the coil flows anticlockwise when seen from above.
Step 3: Check each option:
The flux changes in only one sense (it increases), so the current flows in one direction. It is not alternating, so option (C) is wrong.
The flux does change, so option (D) (zero) is wrong.
Clockwise is the reverse of the direction needed by Lenz's law. So the answer is anticlockwise.
Final Answer:
Anticlockwise current, option (B).