Answer: B. B is correct. NCERT Class 11 Physics, Chapter 9, page 186 describes exactly this: the flow is smooth when the tap is turned on slowly and loses its smoothness when the outflow speed is increased, and page 187 names the limit the critical speed.
Why A is wrong: A is wrong because nothing in the observation changes the water's compressibility; the change is in the flow speed.
Why C is wrong: C is wrong because opening the tap further makes the outflow faster, not slower, and a faster outflow is what loses smoothness.
Why D is wrong: D is wrong because falling below the critical speed would make the flow steadier, not more ragged (trap: flow above the critical speed stays steady).