His career included eminent posts such as Special Secretary to the Prime Minister of India, Indira Gandhi (1981–1984), Executive Director and Special Adviser to the managing director of the International Monetary Fund (1985–1990), India's Ambassador to the European Union (1990–1993), Member Secretary of the Planning Commission (1993–1998), and Member of Parliament, Rajya Sabha (2005 until his death).

[7] The United Nations Human Rights Council observed a moment of silence for Sengupta on 27 September 2010[8] and the Rajya Sabha was adjourned on 9 November 2010, as a mark of respect to him.

In his stint at the Prime Minister's Office in the early 1980s, Sengupta was reportedly unhappy about India's 1982 loan from the International Monetary Fund (IMF), and wanted more to be done for agriculture and small farmers.

According to veteran journalist Rajesh Mahapatra, Mukherjee had become the rallying point for those in the Congress party that were critical of the market reform policies of then Finance Minister, Manmohan Singh.

[13] As Member Secretary of the Planning Commission, Sengupta brought together a group of left-wing economists to prepare a critical mid-term appraisal that highlighted the downside of economic liberalisation.

The finance ministry prevailed over Prime Minister Narasimha Rao to stop the mid-term appraisal from being printed in its original form.

"[14] In the same article, Mahapatra alleges that Sengupta was subsequently denied many posts for which he was a candidate, including Governor of the Reserve Bank of India, which went to Dr. Bimal Jalan in 1997, and Deputy Chairman of the Planning Commission, which went to Dr. Montek Singh Ahluwalia in 2004.

According to Guha Thakurta, Sengupta's critical stance towards "the neo-liberal school of economic thought subscribed to by Manmohan Singh" and refusal to "cultivate political godfathers" meant that he would be "one Finance Minister India never had.

Upon his death, various published tributes to Dr. Arjun Sengupta indicated that his most significant contribution was the final report he produced as the head of the National Commission for Enterprises in the Unorganized Sector (NCEUS), a cabinet-rank position that he held from 2005 to 2009.

The report also revealed that the vast majority of India's 'Poor and Vulnerable' are Muslim or lower caste, and thus in addition to poverty, also suffer from social discrimination.

[17] Critical of existing government policy, the NCEUS pointed out that although enormous funds had been allocated and spent on social development programs, the benefits largely bypassed the poorest of the poor.

Recalling Dr. Sengupta's contribution to identifying the cross-linkages between extreme poverty and the downtrodden, C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, said: "He had a good understanding of social problems and was deeply involved in finding solutions for people at the bottom of the population pile.