Q:

WhatsApp: How to isolate contacts and photos - Privacy concerns

Whatsapp is ubiquitous and is commonly used despite the long scary list of permissions it seeks ( see Help understanding Whatsapp's permissions )
Privacy and security conscious people would like to avoid it and use alternate means like Telegram but there are a huge bunch of people who are blind to the concerns and merrily use it
I am forced to use it, since I have a friends and relatives who are comfortable with this and won't consider switching - some got introduced to smartphones using this, for some others it is convenience of usage and the most common refrain is I have nothing to hide :-( 
So my question boils down to How do I use Whatsapp without exposing my contacts and private photos to Whatsapp (read Facebook)?
This is a self answered question sharing one way and you are welcome to post other ways if you find

A:

Requisites

Download Shelter - an open source app from F-droid or GitHub. Quoting the developer, use cases

Run “Big Brother” apps inside the isolated profile so they cannot access your data outside the profile

“Freeze” (disable) background-heavy or seldom-used apps when you don’t need them. This is especially true if you use apps from Chinese companies like Baidu, Alibaba, Tencent.
Clone apps to use two accounts on one device

Create a dummy gmail account to be populated with only Whatsapp contacts
Device with work profiles (post Lollipop all have them) unless you used a Magisk or Xposed module to disable this

Methodology

Export your contacts to  your dummy Gmail account. Follow instructions here or any other way, like this Export telegram and whatsapp contacts to vcf?
. Delete all non Whatsapp contacts from this account (you don't want Whatsapp / Facebook to see ALL your contacts , right?)
Add this account to your phone from Settings → Google → Account ( will vary , but you can search)
Install Shelter
Click on the app  to see two panes Main (where all your apps are listed) and Shelter where you will see contacts , Google Play Store. Go to Main and long press on Whatsapp and choose Clone to shelter (Work Profile)
Go to shelter tab and set up Whatsapp as if it is a new account and when it asks for contacts point it to the dummy Gmail account created having Whatsapp contacts 
Delete all Whatsapp contacts from your main account and if you wish uninstall or Freeze or disable Whatsapp

Note: Open whatsapp from within the shelter (work profile) not from the app drawer. If you open from outside you will find Whatsapp having access to contacts and gallery. Once you install whatsapp it is completely limited to the storage dedicated to the work profile and cannot see storage outside the work profile
Profit Your contacts and photos are separated ! and Whatsapp will not see at least your future non whatsapp contacts / pictures
On a side note, even with root and mighty Xposed module like XprivacyLua , a successor to Xprivacy, contacts by group cannot be separated ; in other words you can only choose all / starred/ non starred contacts to be visible per app but you can't say hide my Whatsapp contacts ( For more details see Para 18)

