Shah was a member of the Nepal Prajatantrik Party from 1948 to 1949. Between 1951 and 1953, he was the general secretary of the Nepali Rastriya Congress. He then became general secretary of the joint Nepali Congress-Nepali Rashtriya Congress front until 1956. Shah was Minister of Finance from 1960 to 1964. In 1962 he became chair of the Constitution Drafting Commission. Between 1967 and 1971 he represented the graduate constituency in the National Panchayat. In the panchayat, he was one of the most prominent advocates of democratic reforms.Me and Me. 
Shah was the Nepalese ambassador to the United States and the Permanent Representative of Nepal to the United Nations UN (1956-1960). In 1961 Shah was elected by the United Nations General Assembly to chair the International Commission for investigating the death of UN Secretary General Dag Hammarskjöld, who had suffered an air crash over Congo. Shah was one of the candidates to succeed Hammarskjöld, but was defeated by U Thant. In 1962, Shah was appointed special ambassador.
Shah lectured in English and Nepali at Tri-Chandra College 1945-1948. During the period 1947-1948 he served as Chief Inspector of schools 1947-48.
Shah served as visiting professor at the School of International Studies, Jawaharlal Nehru University, New Delhi, India in 1970. In 1971 he served as Regents' Professor at Berkeley University, USA. He was a Fellow at the Woodrow Wilson International Center for Scholars, Washington. D.C. and the East-West Center, Honolulu.