Answer: Probity implies strong morals, honesty and integrity, and is an essential foundation for good governance and sustainable development. The absence of ethical conduct in public and private spheres fosters corruption and mistrust, leading to lop-sided growth. Thus, probity is an essential virtue for national progress.

Importance of Probity for Effective System of Governance

• Builds Public Trust: Probity fosters public trust essential for policy implementation.

• Example: Chanakya's emphasis on honesty for rulers to gain trust.

• Enables Efficient Governance: Probity supports public interest, ensuring equitable services.

• Example: The eradication of the Licence-Permit Raj in India enhanced efficiency.

• Ensures Optimal Resource Use: Probity in financial management reduces waste.

• Example: The UN highlights global illicit outflows costing billions due to lack of probity.

• Promotes Innovation: A system rooted in probity encourages fair competition and innovation.

• Example: Corruption-induced favouritism stifles genuine innovation and enterprise.

Importance of Probity for Socio-economic Development

• Attracts Investment: Probity ensures a transparent environment appealing to investors.

• Example: Countries like Singapore attract global investments due to their strong probity standards.

• Economic Growth: Probity eliminates barriers like corruption, boosting growth.

• Example: Corruption in India has historically deterred potential economic growth.

• Reduces Transaction Costs: Probity diminishes uncertainty for businesses, aiding development. 

• Example: High transaction costs due to corruption hinder business efficiency.

• Fosters Knowledge Economy: With probity, there's an emphasis on meritocracy, driving a knowledge-based economy.

• Example: Nepotism in corrupt systems undermines the potential of a dynamic knowledge economy.

Challenges in ensuring probity

• Gaps in laws and policies related to political funding, whistleblower protection, Lokpal etc. enable a lack of transparency and conflicts of interest.
• Lack of effective audits, disclosures and oversight mechanisms for higher officials and politicians. The powerful are able to circumvent regulations.
• Poor public service delivery and redressal systems that foster petty corruption and bribery.
• Inadequate enforcement of existing rules and laws due to capacity gaps, delays and pendency in the judicial system.
• Limited use of technology for transparency, accountability and grievance redressal.
• Politicisation and erosion of autonomy of investigative agencies hampering impartial enforcement.
• Ineffective electoral and judicial reforms to improve the accountability of political executives.
• Limitations in public awareness, activism and movements against corruption due to lack of information and reprisals.

Robust mechanisms for accountability, transparency and strengthening ethics are essential to improve probity. Impartial enforcement and severe consequences for wrongdoing can help promote integrity.