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Kindly suggest if there is a way out.
Cant we solve it from HTML/CSS code itself. 2-5% clarity loss is accepted.
are turned into, say, these
So the browser must guess and "skip" pixels in-between. When you resize in a graphics program, actual interpolation algorithms are applied and provide a more accurate interpolation of the pixels. Even this will likely show a degradation in most bitmap formats, but at least it's better to a degree, and you can add a sharpening filter to bring back some quality (although this fails horribly with formats lacking in anti-aliasing, such as .gif or other bitmap formats.)
Since you're restricted to server-side output, you might consider automating a process using imageMagick or the GD library to dynamically resize and output the images. ImageMagick has sharpening capabilities. Both are available to most server-side languages (perl, PHP . . . )