When the key K is pressed, current starts flowing through the coil P and this increases the magnetic flux linked with P.
Since S is very close to P, the magnetic flux linked with S also increases. Thus induced emf, hence induced current is produced in S.
The direction of induced current in S is given by the arrow marked 1, in accordance with Lenz's law.
Similarly, when the key is released, magnetic flux associated with the coils decreases and this gives rise to induced current in the direction shown by the arrow marked 2.
That is mutual induction is the production of induced emf in the secondary coil during the time of make or break of current in the primary coil.
