Correct option is C
The correct direct form is "Looking at his watch Barin Babu said, “we are running more or less on time.'"
· The original sentence "Barin Babu observed that they were running more or less on time" is reported speech.
· When converting to direct speech, the verb "observed" becomes "said," and the reported speech is enclosed in quotation marks.
· The tense of the original statement ("they were running more or less on time") changes to present tense (we are running) in direct speech.