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This is my original wallpaper:
After setting it as Lock Screen wallpaper, its quality got reduced and this is how it looks:
Even when set as homescreen, the image quality is reduced.
How to improve the quality of the lock screen/home screen wallpaper?
I have found the solution. The original image size was huge (about 2600 pixels wide). So I used Photoshop and transformed this image to 960 x 480. Now the image looks the same way when set as lock screen or home screen wallpaper like below:
