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India’s largest insurance firm, state-run Life Insurance Corporation of India (LIC), filed a draft prospectus on Sunday that sets the stage for the country’s largest-ever initial public offering and signals that the government intends to push ahead with privatizing some of the nation’s biggest state-run businesses.

Selling 5% of LIC, equivalent to 316.25 million shares, is the centerpiece of the government’s plan to raise 780 billion rupees ($10.3 billion) by off-loading stakes in state-run companies this fiscal year. The LIC IPO alone is expected to raise between $8 billion and $10 billion.

“I can see after the announcement, the reception, there is a buzz in the air,” Finance Minister Nirmala Sitharaman told a media briefing on Monday.

But critics say the government, which is eager to replenish state coffers, should reconsider the IPO’s timing. The IPO filing puts the government on track to complete the LIC listing before the end of the fiscal year in March, meaning it may coincide with a downturn in India’s stock market and higher interest rates.

On Monday, the benchmark Bombay Stock Exchange index fell by around 3% to 56,405.84 points, the biggest single-day drop in nearly a year, as rising tensions between Russia and the U.S. over Ukraine alarmed investors. Since hitting a peak of 62,156 points on Oct. 19 last year, the index is down 9.3%.

At the same time, global investors and traders are betting that the U.S. Federal Reserve will hike interest rates at a meeting next month to rein in soaring inflation and gradually restrict the flow of cheap money that has helped swell stock prices during the pandemic.

“If you look at the global picture, the Fed rate hike is spooking liquidity, and [the LIC] IPO has a significant chance of suffering because of that,” says Sonam Srivastava, analyst at Wright Research, a stock investment advisory.

“The timing of the IPO really surprises me because they could have postponed it…LIC is such a big-ticket company,” says Biswajit Dhar, professor of economics at New Delhi’s Jawaharlal Nehru University. “They should have waited for a while and let events like the Federal Reserve interest rate rise to pass.”

If market volatility persists through March, the government may have to lower LIC’s issue price to attract investors, which would reduce its haul from the IPO, says Piyush Nagda, head of investment products at Prabhudas Lilladher, a stock brokerage.

LIC would not be the first record Indian IPO to disappoint. In November, Indian digital payments firm Paytm raised $2.4 billion in its listing, India’s largest at the time, but shares have lost over 60% of their value since debuting.

But LIC has two advantages over Paytm. First, it’s profitable. The state-owned insurance firm’s net profit rose 7.15% in the most recent fiscal year to 29.06 billion rupees ($384.9 million).

Second, LIC has a near monopoly on its sector. Life Insurance Corporation of India was born in 1956 after the Indian Parliament passed the Life Insurance of India Act that nationalized the insurance industry, merging over 245 insurance companies after some went bust in the decade after World War II. It currently has 290 million policyholders, equal to roughly 90% of the U.S. population.

Regulators opened up the life insurance market in 2000, and LIC now faces competition from two dozen private insurance firms. The market has expanded fivefold since then to cover roughly 500 million Indians, but LIC still issues three out of every four insurance policies in the country. It also controls roughly 4% of all publicly traded shares in India and owns prime real estate and other assets including a vast art collection.

LIC was one of the biggest buyers of Indian stocks when the market crashed in April to June 2020. As the market rebounded, the company booked bumper profits in the past financial year that ended in March 2021, says Tanushree Banerjee, cohead of research at Equitymaster.

“These facts alone make the IPO enticing,” says Banerjee.

The government of Prime Minister Narendra Modi has a lot riding on the IPO.

India’s economy, Asia’s third-largest, was in the midst of an economic slowdown prior to COVID, and in the first year of the pandemic it contracted 6.6% to record India’s worst recession since its 1947 independence from Britain.

The World Bank expects the country’s economy to expand by 8.3% this fiscal year, but growth so far is uneven, Dhar says. Consumer spending, for one, has yet to recover from the pandemic.

At the same time, Modi’s administration is aiming to reduce the nation’s deficit to 6.4% of GDP from its current level of 6.9%, and any capital the government reaps from the LIC listing can go toward paying down the deficit.

In fact, the government could carry out other privatization efforts for that same reason.

“I expect the government will be looking to sell stakes in more state-run enterprises primarily because of the fiscal situation,” says Dhar.

Already, the government sold debt-ridden national carrier Air India to the Tata Group for $2.4 billion in January, and officials have hinted that they are planning to sell stakes in state-run oil refiner Bharat Petroleum and logistics firm Container Corporation of India in the next financial year.

“I think in the back of their minds policymakers have a sneaking doubt on how well the economy is going to perform. If things don’t turn out well, then they can fall back on privatization,” Dhar says.