When a rotating disc shrinks in radius, its moment of inertia decreases. According to the **conservation of angular momentum**, which states that the angular momentum \( L \) of a system is conserved if no external torque acts on it, we have:
\[
L = I \omega
\]
Where:
- \( I \) is the moment of inertia,
- \( \omega \) is the angular velocity.
Since no external torque is applied, angular momentum is conserved:
\[
I_1 \omega_1 = I_2 \omega_2
\]
Where:
- \( I_1 \) and \( \omega_1 \) are the moment of inertia and angular velocity initially,
- \( I_2 \) and \( \omega_2 \) are the moment of inertia and angular velocity after the radius shrinks.
Since the moment of inertia \( I \) for a disc is given by:
\[
I = \frac{1}{2} m r^2
\]
If the radius \( r \) decreases, the moment of inertia decreases. To conserve angular momentum, the angular velocity \( \omega \) must increase.
Thus, the correct answer is:
\[
\boxed{(B) \, \omega \, \text{increases}}
\]