Budding is a form of asexual reproduction in which a new organism develops from an outgrowth or bud due to cell division at one particular site. Organisms such as Hydra use regenerative cells for reproduction in the process of budding. In Hydra, a bud develops as an outgrowth due to repeated cell division at one specific site. These buds develop into tiny individuals and when fully mature, detach from the parent body and become new independent individuals.
Thus, the correct answer is option (A), 'Hydra'