In the arrangement shown in the figure, there are two coils wound on a non-conducting cylindrical rod. Initially, the key is not inserted. Then the key is inserted and later removed. Then :

In the figure, two coils are not electrically connected to each other because they are wound on a non conducting rod. Say Coil-1 is connected across a battery through a key. This coil is called primary coil. Coil-2 is connected across a galvanometer. This coil is called secondary coil. 

When the key is pressed it is observed that, the galvanometer shows a small momentary deflection and then returns to zero. When the key is released, the galvanometer again shows a small momentary deflection, but in opposite direction and then returns to zero. As the coil is connected to a non-conducting rod the self induced electromotive force or voltage is very less and thus the current that flows in one direction slowly diminishes and returns to zero. Similarly when the key is released the current flows in the opposite direction and slowly diminishes.

Thus, the rate of change of electromotive force (e.m.f.) in coil-1, decides the magnitude of deflection of galvanometer. The magnetic flux of primary coil is linked through the rod to the secondary coil. Thus, the induced e.m.f. or current is produced in a coil when varying current flows through a neighboring coil.